Dollar Weakens Amid Rising Bets on Dovish Fed
By
Paulo Trevisani, Dow Jones Newswires
The dollar is on path to end the quarter more than 5% weaker than it started, amid growing expectations of interest rate cuts by the Fed.
On the CME's FedWatch tool, odds of three cuts this year near 49%, up from 29% a month ago. Feeding those expectations are cooling economic and inflation indicators. Fears that tariffs could reignite inflation, however, keep the Fed from a dovish pivot. With Trump cranking up pressure for rate cuts, markets increasingly price a more dovish Fed, weighing on the dollar.
The WSJ Dollar Index is on pace for its largest quarterly decline since the 4Q 2022.
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