Dollar Steady, Fed Cut Expectations Begin to Shrink
The US dollar index (DXY) moved virtually unchanged on Thursday (February 26th), holding around 97.7 and remaining near the one-month high reached last week. The market is still awaiting new catalysts after concerns over President Donald Trump's tariff policies eased, although trade policy uncertainty has not completely disappeared.
Sentiment is also being held back by growing caution regarding the US-Iran talks in Geneva. Market participants believe this geopolitical issue has the potential to quickly shift safe haven flows—especially if negotiations heat up or escalate.
Data-wise, the latest release shows that US initial jobless claims rose slightly to 212,000 for the week ending February 21st, while continuing claims fell to around 1.833 million. These figures indicate the labor market remains relatively stable, with companies still tending to retain workers (low-fire).
In line with the relatively resilient data, the financial market is beginning to reduce the aggressiveness of its projections for a Fed interest rate cut. Interest rate derivatives indicate a 50% chance of a 25 bps rate cut in June—the lowest so far this year—while the probability of a “third” rate cut by year-end is diminishing.
Overall, the dollar held up due to a combination of solid employment data and diminishing rate cut expectations, but room for gains remains limited by headline uncertainty—particularly the direction of future tariffs and geopolitical risk developments.
Source: Newsmaker.id
