The US Dollar Index (DXY) drops to its lowest point in two months, driven by declining support from the US tariff narrative and Federal Reserve Chair Jerome Powell's indication that there's no need to rush into further policy adjustments. While the Greenback briefly rallied on strong inflation data, it ultimately retreated, reflecting market concerns over ongoing trade policy uncertainty.
The US Dollar Index tumbled to new two-month lows. The US tariffs narrative lost momentum as the Dollar’s support. Chair Jerome Powell said there is no rush to adjust policy further. Another dreadful week for the US Dollar saw the currency slip back into the sub-107.00 region for the first time since mid-December, as measured by the US Dollar Index .
These crowded longs are expected to be more vulnerable to any negative news affecting the US Dollar, potentially triggering a rapid unwind and exacerbating any correction in the index. However, open interest has declined over the past three weeks, which could ultimately limit the downside risk. What’s next? All eyes will be on next week’s US economic calendar, where the spotlight will shine on the release of the FOMC Minutes and the latest advanced PMIs.
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