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The U.S. dollar traded in a narrow range on Thursday as traders await speeches from Federal Reserve officials and key economic data for clues on future interest rate cuts.
The greenback remains under pressure due to growing expectations that the Fed could lower rates faster than other central banks, eroding the dollar’s yield advantage, which has supported the currency for the past.
The anticipation of rate cuts pressured U.S. treasury yields weighing further on the dollar. Looking ahead, the market now turns its attention to U.S. jobless claims data, as the Fed’s focus has shifted from inflation to the health of the labor market. If the labor market weakens, Treasury yields could decline further.
Fed Chair Powell’s comments will also be scrutinized for clues on upcoming monetary policy decisions, as will Friday’s release of the Core PCE Price Index, the Fed’s preferred inflation gauge. The PCE Price Index is expected to remain unchanged at 0.2% month-on-month. However, any significant variation could trigger volatility in the dollar and Treasury yields.
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