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U.S. Dollar Declines on Weak Data; Fed Rate-Hike Cycle May Be Nearing End

The U.S. dollar dropped to a two-month low on Tuesday due to weak economic data, leading investors to believe that the Federal Reserve's tightening cycle may soon end. Meanwhile, other central banks continue raising interest rates to combat high inflation.


Sterling and Euro Reach New Highs Against Dollar

The British pound and the euro experienced gains against the U.S. dollar, with the former reaching a 10-month high and the latter hitting its highest point since February.

Challenges Facing Recovering Economy Pressure U.S. Dollar

Juan Perez, director of trading at Monex USA, suggests that the dollar will continue to weaken due to the recovering economy's desire to move away from dollar dominance, creating downward pressure on its value.

Low Job Openings and Declining Factory Orders Impact Dollar

Weak economic data, including low job openings and a decline in factory orders, contributed to the dollar's downturn, indicating that the rate hikes may end.

Market Awaits Data to Determine U.S. Economic Resilience

Investors anticipate further data to evaluate the U.S. economy's ability to withstand the Fed's rate-hike mentality or provide a market break.

Rate Futures Market Prices in Hike Possibility

The rate futures market shows an even chance of a 25 basis-point rate hike in May, while the rest of the odds favor a pause from the Fed. By the end of the year, the market has factored in potential rate cuts.

Pound and Euro Experience Gains Against Dollar

The pound and the euro increased against the U.S. dollar, reaching $1.2520 and $1.0964, respectively.

European Central Bank Expected to Continue Rate Hikes

Despite the U.S. dollar's decline, traders still anticipate further rate hikes from the European Central Bank.

Reserve Bank of Australia Holds Interest Rates Steady

The Reserve Bank of Australia maintained its cash rate at 3.6%, halting a streak of 10 consecutive hikes, as policymakers seek additional time to evaluate the economic outlook.

U.S. Dollar Falls Against Japanese Yen

The dollar experienced a 0.6% decline against the Japanese yen, falling to 131.74.