Dollar weakens due to trade worries and deficits, but recovers on strong economic reports.

From Yahoo Finance: 2025-07-01 15:39:00

The dollar index fell by -0.13% on Tuesday, reaching a 3-1/3 year low due to uncertainties over US trade policies and rising deficits. The dollar recovered on stronger-than-expected ISM manufacturing and JOLTS job openings reports. Fed Chair Powell expects tariff impacts on inflation data in the coming months.

The US June ISM manufacturing index rose to 49.0, with the prices paid sub-index at 69.7. May JOLTS job openings unexpectedly rose to 7.769 million, showing a strong labor market. Markets are pricing in a 21% chance of a -25 bp rate cut at the July FOMC meeting.

EUR/USD fell by -0.01% as the euro lost ground from a 3-3/4 year high, influenced by comments on significant gains warranting an ECB rate cut. Despite initial gains due to a weaker dollar, the euro faced bearish inflation news. Upward revisions to Eurozone manufacturing PMI and German labor market data provided some support.

Eurozone June CPI edged up to +2.0% y/y, while core CPI remained at +2.3% y/y. ECB May inflation expectations eased in 1-year and 3-year outlooks. June manufacturing PMI was revised upward, and German unemployment change was better than expected.

The yen climbed to a 3-1/2 week high against the dollar, supported by strong Japanese economic news. August gold and September silver closed higher as concerns over US trade policies and rising deficits boosted demand for safe-haven assets. Silver prices found support on positive global economic news and fund buying.

Read more: Dollar Slips on Trade Uncertainty and Rising US Deficits