The US Dollar Index (DXY), which tracks the US Dollar (USD) against a basket of six major currencies, traded lower around 100.90 during the Asian session on Thursday (5/15). The greenback remained under pressure as investors assessed ongoing trade-related uncertainties, despite recent easing of tensions.
Speculation has been growing that Washington may prefer a weaker dollar to support its trade agenda. The Trump administration has argued that a strong dollar, compared to weaker regional currencies, has hurt US exporters.
Improving global trade sentiment has eased recession fears, prompting markets to scale back expectations for a Federal Reserve (Fed) interest rate cut. LSEG data showed a 74% chance of a 25 basis point cut in September, down from previous bets for a cut in July, which provided some support to the US Dollar.
On the geopolitical front, senior Iranian official Ali Shamkhani said on Wednesday that Iran is willing to sign a nuclear deal with President Trump. NBC reported the proposal included a pledge by Iran to never develop a nuclear weapon in exchange for the immediate lifting of all US sanctions.
Meanwhile, US inflation continued to ease. The Consumer Price Index (CPI) rose 2.3% year-over-year in April, just below March's 2.4% and market forecasts, marking the lowest annual headline inflation in three years. However, this may be the last strong CPI reading for a while, as the Trump administration's upcoming tariffs on major trading partners are set to take effect in May.
The US dollar's recent rally, fueled by hopes of US-China tariff relief, began to fizzle out as traders refocused on the broader implications of US trade policy. Attention now turns to the upcoming US Retail Sales and Producer Price Index (PPI) data, due out on Thursday. (Newsmaker23)
Source: FXstreet
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