US Dollar under Pressure: Markets Speculate on Fed Rate Cuts

The American dollar is hovering near its weakest level in nearly a week as traders anticipate two more interest rate cuts in the US later this year. This expectation persists despite the cautious stance of Jerome Powell, the Chairman of the Federal Reserve, regarding further easing measures. The dollar index, which measures the value of the US currency against six other major currencies, stagnated at 97.230 – only slightly higher than the lowest level since last Thursday, which was 97.198. So far this week, the index has recorded a 0.5 percent decline. This is due to market expectations of a quarter-point rate cut at each of the remaining two Fed meetings of the year. Additionally, another cut is anticipated in the first quarter of 2026, essentially aligning with the Fed’s forecasts following a recent rate cut. After the dollar rebounded following the Fed’s decision announcement and Powell’s subsequent press conference, which fell short of market expectations, it was previously at its lowest level since early 2022. Powell recently stated that the central bank must continue to weigh the competing risks of high inflation and a weakening labor market in its policy decisions. He called this balancing act "a challenging situation." The US dollar lost 0.04 percent to 147.59 yen, while the euro slightly rose to 1.1816 USD. The Australian dollar slightly fell to 0.6598 USD, shortly before the release of local consumer inflation data.