US Dollar Index Stabilises after Significant Pressure
The dollar index held steady at 97.2 on Friday, hovering near its lowest level since February 2022, after a four-day slide in which the greenback lost around 1.5%, driven by mounting expectations of Fed rate cuts.
Chair Powell struck a notably dovish tone during recent congressional testimony, suggesting that in the absence of inflationary pressures from tariffs, the Fed would have continued its rate-cutting cycle.
The ceasefire between Iran and Israel is holding, boosting risk sentiment, while concerns about the Federal Reserve’s independence emerged after reports that President Trump is considering an early appointment for the next Fed chair, putting pressure on the greenback.
Fresh economic data further strengthened the case for Fed rate cuts, including a larger-than-expected 0.5% contraction in Q1 gross domestic product (GDP) and a rise in continuing jobless claims to their highest level since 2021.
The dollar weakened to a three-and-a-half year low against the euro and sterling, while hitting multi-month lows versus other currencies.
The dollar index fell to 97.1 on Friday, its lowest level since February 2022, extending this week’s drop to almost 2%, driven by mounting expectations of Fed rate cuts.
Chair Powell struck a notably dovish tone during recent congressional testimony, suggesting that in the absence of inflationary pressures from tariffs, the Fed would have continued its rate-cutting cycle.
US economic data showed personal consumption expenditures fell 0.3% in May, the sharpest drop this year. The Fed’s preferred inflation gauge, core PCE (excluding food and energy), rose 0.2%, slightly above forecasts.
As a result, the dollar weakened to a three-and-a-half year low against the euro and sterling, while hitting multi-month lows versus other currencies. #US Dollar Index Stabilises after Significant Pressure#
