US Dollar bounces back despite weak ADP report
The US Dollar (USD) is trading with a slightly positive tone on Wednesday, bouncing back a bit after hitting the lowest level since February 2022 on Tuesday.
The modest rebound comes as traders digest US economic data and cautious comments from Federal Reserve (Fed) Chair Jerome Powell, which have slightly eased the downward pressure on the Greenback. Still, concerns over tariffs, fiscal policy and the Fed’s next move continue to weigh on the USD broader outlook.
The US Dollar Index (DXY), which measures the Greenback’s performance against a basket of six major currencies, is moving higher, erasing all of Tuesday’s losses. At the time of writing, the index is hovering near 97.12 during the American trading session, up around 0.50% on the day, despite a weaker-than-expected ADP Employment report.
Fed Chair Jerome Powell said on Tuesday that the Fed has delayed cutting interest rates to better understand the impact of tariffs on inflation and the broader economy.
Speaking at the ECB Forum in Sintra, Portugal, Powell noted that “as long as the US economy is in solid shape, the prudent thing to do is to wait and learn more” before moving forward with rate cuts. He explained that without these trade-related price pressures, the Fed might have already started easing policy.
While Powell emphasized the need for a cautious, data-driven approach, his message is increasingly overshadowed by growing political pressure to lower interest rates. Still, he did not rule out a rate cut at this month’s meeting, but made it clear that any decision will depend on upcoming data and economic conditions.
Source: Fxstreet
