Dovish
Dovish describes a central bank stance that leans towards looser policy: lower interest rates, continued stimulus, and greater concern for growth and employment than for inflation. Dovish language typically weakens the currency, since lower expected returns make it less attractive to hold, and it often supports equities and gold at the same time.
Full explanation
Dovish signals include downgraded growth or inflation forecasts, emphasis on downside risks, patience over further tightening, or votes for a cut. As with hawkish messages, the reaction depends on what markets already expect: a dovish statement that is less dovish than feared can strengthen a currency. Always read the tone relative to consensus and to the bank's own previous communication.
Why traders watch it
A dovish shift can reverse a currency trend within minutes, so knowing the expected tone before a central-bank event is essential risk management.