The US dollar weakened against a number of major global currencies as market expectations for the Federal Reserve's (Fed) monetary policy easing increased. Market participants believe inflationary pressures in the United States are beginning to ease, opening room for the central bank to lower interest rates in the near future.

These expectations of interest rate cuts are the main factor pressuring the dollar. Lower interest rates make the yields on dollar-denominated assets less attractive, prompting some investors to shift funds to other assets, including emerging market currencies and commodities.

In addition to monetary policy factors, improving global risk sentiment also puts pressure on the dollar. When markets tend to be more optimistic about the economic outlook and global stability, demand for the dollar as a safe-haven asset typically decreases. This condition encourages investors to seek higher yields outside the US dollar.

The dollar's weakening was also reinforced by rising gold and other commodity prices. Because gold is traded in US dollars, a weaker dollar makes gold cheaper for holders of other currencies, increasing demand and pushing prices up. This inverse relationship often indicates pressure on the dollar in global markets.

On the other hand, US economic data showing a slowdown in several sectors also influences the dollar's movements. The market believes that the US economy is starting to lose momentum, thus opening up the opportunity for looser monetary policy.

Going forward, the direction of the dollar's movement will depend heavily on inflation data, the labor market, and the Fed's policy signals. As long as expectations of interest rate cuts remain strong and global risk sentiment is relatively positive, the US dollar has the potential to remain under pressure in the short term. (Cay)

Source: Newsmaker.id