Fed Independence Questioned, Dollar Weakens
The US Dollar Index (DXY) came under pressure this morning after President Donald Trump fired Federal Reserve Chair Lisa Cook, sparking concerns about the US central bank's independence. This move raised market expectations for an interest rate cut, significantly pressuring the greenback.
According to a Reuters report, the DXY fell around 0.3% to 98.19, despite initially strengthening on better-than-expected new home sales data. However, this positive sentiment faded when news of Lisa Cook's dismissal shook global financial markets.
The market now rates the probability of a Federal Reserve interest rate cut at its September meeting at 87%, according to the latest data from FXEmpire. These expectations have pressured Treasury yields and caused the US dollar to lose its appeal as a high-yield asset.
The dismissal of the Fed official has increased US political and economic uncertainty, prompting investors to turn to safe-haven assets such as gold and the yen. This has added bearish pressure to the dollar index, which has long been a benchmark for the greenback's strength against six major currencies.
Technically, the DXY index failed to break through the strong resistance zone at 98.422–98.853, after peaking at 98.827. FXStreet analysts believe that as long as the DXY remains below this area, the downtrend has the potential to continue. The 98.00 level serves as important psychological support, which, if broken, could deepen selling pressure.
Source: Newsmaker.id
