Dollar Dips as Federal Reserve Signals Possible Rate Cuts
The U.S. dollar declined as Federal Reserve officials hinted at possible interest rate cuts due to concerns about the job market. A limited Iranian response to U.S. bombing further impacted the currency. Traders are now expecting up to three rate cuts this year amid global economic uncertainties.
The dollar fell on Monday after Federal Reserve policy maker Michelle Bowman suggested the central bank should consider interest rate cuts soon, amid concerns over the job market and inflation. Expectations rose for restrained Iranian retaliation to U.S. bombings, further pressuring the currency.
Despite the Federal Reserve's maintenance of current interest rates, traders are betting on further cuts following comments by Fed officials. Futures markets are now pricing in multiple cuts as economic uncertainties loom. The dollar's decline reflects these shifting expectations.
In the wake of tensions in the Middle East, the dollar initially strengthened as traders adjusted their portfolios. However, optimism about a limited conflict led to a weakening dollar by the end of the day. The Japanese yen showed volatility due to Japan's oil imports reliance.
(With inputs from agencies.)
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