The dollar hits three-and-a-half-year low against the euro and sterling
US dollar plunges to multi-year low
- Traders are significantly increasing their bets on more aggressive interest rate cuts by the Federal Reserve this year.
- This shift in market sentiment follows Federal Reserve Chair Jerome Powell's testimony, which was widely interpreted as dovish, hinting at earlier rate cuts.
- Consequently, the US dollar plunged to multi-year lows against the euro and sterling.
- Market data now shows a 23% probability of a July rate cut and a 93% likelihood for a September cut, with traders anticipating 66 basis points of cuts by year-end.
- Additional pressures on the dollar include criticism of Powell by Donald Trump, upcoming trade negotiations, and a pending tax and spending bill.