Dollar Weakens, Fed Rate Cut Expectations Rise
The US dollar index fell near 98 on Tuesday, reaching its lowest level since early October. This decline was triggered by growing market expectations that the Federal Reserve (Fed) will continue cutting interest rates. Markets currently expect two 0.25% rate cuts by 2026, supported by President Trump's call for further lower borrowing costs.
However, despite market expectations for more rate cuts, Fed officials remain divided on the future direction of policy. Governor Miran warned on Monday that the risk of a recession could increase unless monetary policy is adjusted. Conversely, Cleveland Fed President Beth Hammack stated that current policy is good enough to pause, allowing time to assess the impact of the 75 basis point rate cuts implemented this year.
Furthermore, the price of precious metals such as gold and silver also surged due to increased safe-haven demand amid US-Venezuela tensions. This geopolitical uncertainty is further putting pressure on the US dollar, which is weakening against other major currencies.
The Japanese yen also strengthened against the dollar after the Bank of Japan raised its policy interest rate to its highest level in three decades. This decision had a direct impact on the yen exchange rate, which strengthened after the announcement, exacerbating the dollar's weakness against the yen.
Overall, the US dollar continues to face pressure, influenced by expectations of an interest rate cut from the Fed, geopolitical uncertainty, and movements in other currencies like the yen. The market will continue to monitor further developments related to monetary policy and geopolitical dynamics to assess the future direction of the dollar. (asd)
Source: Newsmaker.id
