The U.S. dollar weakened to 103.6 on Monday, hovering near a five-month low amid rising economic concerns and trade uncertainties.
DXY falls toward five-month low
February retail sales rose by just 0.2%, falling well short of the 0.6% forecast, suggesting a slowdown in consumer spending after January’s downwardly revised 1.2% decline. This data reinforced worries about the broader economic outlook, particularly as inflationary pressures persist alongside weakening growth indicators.
With the Federal Reserve’s policy decision set for Wednesday, markets widely anticipate that the central bank will hold interest rates steady. However, expectations for rate cuts continue to build, with some analysts now forecasting as many as three reductions this year as economic headwinds intensify. Investors are closely watching the Fed’s updated economic projections and any signals on the timing and extent of future easing.
Euro gains momentum
Adding to the dollar’s weakness, the euro gained momentum after Germany secured a fiscal agreement to boost defense spending and stimulate growth in the eurozone’s largest economy. This development strengthened confidence in the euro, putting additional pressure on the greenback as investors weighed the relative economic trajectories of the U.S. and Europe.
