Dollar Weakens Over Rising Likelihood of a Fed Rate Cut

The US dollar index hovered close to seven-week lows on Wednesday over increasing likelihood of Fed cutting interest rates. As trade tensions escalate globally and the US inflation remains on the downside, officials at the Federal Reserve are dropping hints about the central bank stepping in.

On Tuesday, Fed Chairman Jerome Powell also commented that the Fed will take appropriate action to offset any pressure on the economy because of trade uncertainties. At the time of writing, DXY is trading at 97.02, falling more than 1.3% from the over two-year high reached on May 23.

Recently, we saw the RBA cut interest rates, and before that, the RBNZ too had done the same. As more central banks start cutting rates, it could commence a monetary easing process across multiple economies which have been showing signs of slowing down lately.