Dollar On Course To Close One Of Its Worst Weeks In Months!
During the early Friday session, the US Dollar gained a little upside after rebounding from its multi-month lows. The recent decline in the US Dollar can be attributed to the fears that the Fed will end the rate hike cycle.
If we look at the dollar index, it is trading near 99.620 with a 0.2% gain for the day. But the highlight is the fall of the dollar index below the 100 level. That's something that hasn't happened in almost a year.
Dollar Down By 2.5% For The Week
Although the US Dollar is positive in the short term, let's not forget that it is down by 2.5% for the week. In fact, the US Dollar index is all set to close one of its worst weeks in the last eight months.
The biggest factor behind the weakness of the USD is the inflation data from the USA which was softer than expected. This supports the view that the Fed may stop with the rate hikes after one additional hike at the next meeting.
The recent rebound in the USD also caused the EUR/USD to lose 0.2% of its value and was last seen at 1.1207. Earlier, the EUR/USD managed to touch a 16-month high near 1.1244, which tells us that the recent decline is just a minor correction.
If we look at the EU's fundamental outlook, the highlight is the wholesale prices data from Germany which fell by 2.9% on a yearly basis. That drop was more than the expectations and tells us that German inflation is indeed going down.
GBP/USD, which tracks the USD and the GBP, also fell by 0.3% to levels near 1.3096. However, the GBP/USD crossed the 1.30 level a day earlier, which only happened last seen on April 2022. Similarly, the USD/JPY also rose to 138.3 after gaining 0.2% upside for the day.
Over all, the USD has gained little upside in the short-term while the long-term outlook remains USD bearish on accounts of rate cut.