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Fed Chair Jerome Powell noted that inflation is approaching the central bank’s target but remains somewhat elevated. He also warned of potential price pressures linked to existing trade tariffs, emphasizing the Fed’s mandate to prevent temporary inflation spikes from becoming entrenched.
Yield Curve and Labor Signals Add to Bearish Outlook
Market participants expect the Fed to begin cutting rates as early as June, with four rate reductions projected through 2025. The 10-year U.S. Treasury yield remains below 4.0%, reflecting growing risk aversion and declining demand for dollar-denominated assets.
In addition, the unemployment rate edged up to 4.2% from 4.1%, raising questions about the resilience of the labor market. While job creation remains steady, the uptick in unemployment suggests underlying weakness that could reinforce the case for policy easing.
Overall, the combination of rising rate-cut expectations, softening labor indicators, and cautious investor sentiment continues to undermine support for the U.S. Dollar in the near term.
US Dollar Index (DXY) – Technical Analysis
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