Dollar weakens against euro and sterling due to Fed rate cut expectations

From Yahoo Finance: 2025-06-25 20:44:00

The dollar dropped to a 3.5-year low against the euro and sterling as traders anticipate more rate cuts from the Federal Reserve. Fed Chair Powell’s dovish comments hint at a potential July rate cut, with futures traders now pricing in a 23% chance. Trump plans to nominate a new Fed Chair next year, likely more dovish than Powell.

A potential shadow Fed Chair could undermine Powell’s influence if inflation accelerates. Chicago Fed President Goolsbee stated that a replacement wouldn’t impact monetary policy until confirmed. The euro and sterling rose against the dollar, hitting multi-year highs. The Swiss franc reached a 10.5-year high, while the dollar fell against the Japanese yen.

Investors are awaiting Trump’s July 9 deadline for tariff deals with trading partners. Congress aims to pass a tax and spending bill by July 4, which could boost the dollar if it stimulates growth. The dollar faces pressure from deficits, with international investors reallocating away from U.S. assets due to economic concerns. Cryptocurrencies, like bitcoin, also experienced fluctuations in value.



Read more at Yahoo Finance: Dollar drops to lowest since 2021 against euro, sterling