Dollar Dips as Fed Rate Cut Anticipation Grows Amid Legal and Political Tensions

The U.S. dollar faced a downturn against major currencies on Thursday as speculation grew regarding potential interest rate cuts by the Federal Reserve next month. New York Fed chief John Williams hinted at this possibility, heightening market expectations.

Meanwhile, President Donald Trump's intensified efforts to exert influence over monetary policy, including attempting to fire Fed Governor Lisa Cook, have increased pressure on the currency. Cook retaliated with a lawsuit, challenging Trump's authority to remove her, adding further legal uncertainty.

Though some losses were trimmed following positive labor market data, the dollar remained under watch. Analysts suggest outcomes of key economic indicators will influence Fed decisions at its September meeting. Political developments, such as the euro's rise despite French political turmoil, also contributed to currency fluctuations.

(With inputs from agencies.)