The USD has witnessed a pull in value in the Friday trading session against the major currencies. The data shows that the traders have continued selling the USD on a large scale in two consecutive sessions.
US Inflation is Cooling Off
The US inflation has been cooling off for a while and now, the traders strongly believe that the Feds will make future decisions based on the lowering inflation.
The Feds have continued with their spree of increasing the interest rates for several months. However, the situation started to change in the year 2023.
In the past months, whenever the inflation data was lower than expected, the Feds would keep hiking the interest rates.
They did not take into account that the constant hiking could cause other problems for the US economy in the future. Turns out, the Feds did not consider the recession risk into account.
There are strong fears of recession hitting the US and this is something that cannot be avoided at all. This is a major problem for the entire world but the US will be the first country to deal with the recession.
With the recession fear in mind, the Feds have to rethink their monetary policy. It is important they come up with the right way to deal with the growing fear of recession.
The only option the US has is to delay the recession hit but it can’t be fully avoided. The country has to take the necessary actions and ensure that the recession is avoided/delayed as much as possible.
This brings the US Feds to a point where they have to deal with the situation and listen to the speculations made by the investors/public alike.
US Dollar Index’s Downtrend
The report shows that the US Dollar Index (DXY) has witnessed a sliding trend in the recent trading session. The value of the dollar against the six major currencies has only moved downward.
It has slid by 0.1% in the Friday trading session and is now hovering at 101.965. This is the lowest level that the dollar has slipped to against the six major currencies since June.
Surprisingly, this is not the worst performance the DXY has demonstrated in the running week. In the entire week, the DXY has recorded a 1.6% dive against the six major currencies.
This is the worst performance that the dollar has recorded against the major currencies since November 2022.
When Did the Dollar Lose its Momentum?
It was the month of November 2022 when the dollar price started to falter against the major currencies real.
The Feds started to lower their aggression against the interest rate hikes in a particular month.
That was the month when the results of the aggressive interest rate hikes started to show their true colors in terms of inflation rates.
Since then, the dollar has not found a solid ground or a reason to experience a pump and be pushed higher.
Prior to November, the interest rate hikes were 75 bps but starting from the respective month, the hikes were lowered to 50 bps.
Many analysts are now hoping that the interest rate hikes will be loosened up by 25 bps more. If that happens, then the future interest rate hikes would be 25 bps, which means trouble for the USD.
Price Surge of the Yen
The price comparison of the USD against the Japanese yen shows that it has fallen by 0.6% against the Japanese currency. After the dip, the value of the yen versus the greenback is 128.51.
The value of the GBP has recorded a 0.1% surge against the dollar and it currently trades at 1.2210. The European currency remained flat against the dollar in the recent session, staying at 1.0846.
The USD has experienced a 0.4% dive against the trading price of CNY. It currently trades at a low of 6.7147.