Dollar Dips as Trade Optimism and Fed Rate Cut Bets Surge

The U.S. dollar slid on Monday, weighed down by market optimism over potential U.S. trade deals and growing expectations for Federal Reserve rate cuts. This decline came as the dollar approached a four-year low against the euro and sterling, and a long-term trough against the Swiss franc.

Investor sentiment turned optimistic after reports of a nearing trade deal between the U.S. and China, alongside Canada's withdrawal of a digital services tax. Fed Chair Jerome Powell's dovish remarks further fueled speculations. The FedWatch Tool indicated a 91.5% probability for at least a quarter-point rate cut by September, signaling market confidence in reduced rates.

Simultaneously, the U.S. Treasury hinted at upcoming trade agreements by September 1, while Trump expressed dissatisfaction with Powell's leadership, suggesting potential changes. The dollar's performance remains influenced by ongoing trade negotiations, with the euro, yen, and pound showing marginal gains against the greenback.

(With inputs from agencies.)