Dollar Dips as Tensions Ease (and the Fed Holds Its Ground)
Key Take‑aways
- USD Index near multi‑year lows – Two back‑to‑back dipping days.
- Israel–Iran ceasefire improving sentiment but still some uncertainty.
- Fed Chair keeps rates steady for now, waiting for tariff‑impact clues.
- Markets expect at least two more cuts later this year.
- Treasury yields slipping – 10‑year about 4.28%.
Why the Dollar Took a Hit
The greenback has been shedding value as the rebels in the Middle East finally called a truce. With fighting paused, investors are feeling a bit more relaxed, which means less “danger‑money” buying the USD. Unfortunately, the Iran nuclear concessions are still a bit fuzzy, so some risk remains.
The Fed’s Take On the Situation
Jerome Powell stayed cool in a recent Congressional testimony, saying rate hikes are paused until we see a clearer picture of how tariffs are stoking inflation. Even with that calm, investors are betting that the Fed will still cut rates at least twice in the remaining months of the year.
What’s on the Horizon
Traders will keep an eye on Powell’s next remarks plus upcoming economic updates:
- Durable goods orders
- GDP growth figures
- Core PCE inflation data
These numbers could tip the scales on the Fed’s next move and help determine whether the dollar will bounce back or keep sliding.
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