Dollar Drops Heavily Against Major Currencies

(RTTNews) - The U.S. dollar plunged against major currencies during the week ended June 27 amidst easing geopolitical tensions as well as renewed hopes of trade deals between the U.S. and its trade partners. The ebbing safe haven demand following the ceasefire between Israel and Iran, Fed Chair Jerome Powell's not-so-hawkish congressional testimony as well as weak economic data from the U.S., all contributed to the dollar's decline.

Data released on Thursday by the U.S. Bureau of Economic Analysis had shown the U.S. economy contracting at an annualized rate of 0.5 percent in the first quarter of 2025, recording the first quarterly contraction in three years. The decline was sharper than the second estimate of a 0.2-percent drop.

Data released by the U.S. Bureau of Economic Analysis on Friday had shown the PCE Price Index at expected levels. The core component however stood at levels higher than anticipated.

The weak economic data bolstered Fed rate cut hopes. According to the CME FedWatch tool, the expectations of a rate cut by the Fed in September increased to 91.4 percent on Friday from 82.7 percent on Monday. Rate cut expectations for the FOMC review in October also increased to 97.5 percent on Friday from the level of 93 percent recorded on Monday.

The U.S. Dollar inter alia slipped against the euro, the British pound, the Australian dollar, as well as the Japanese yen during the past week. The greenback also declined against the Swiss franc, the Swedish krona and the Canadian Dollar. The Dollar Index which measures the Dollar's strength against a basket of 6 currencies also dropped heavily.

From the level of 98.71 on June 20, the Dollar Index plunged 1.33 percent in a week's time. The Index which had touched a weekly high of 99.42 on Monday dropped to the weekly low of 97.00 by Friday. The Index eventually edged up and closed the week at 97.40.

Amidst the dollar's weakness triggered by hopes of easing tariff and geopolitical tensions, the EUR/USD pair rallied 1.71 percent during the week ended June 27. From the weekly low of 1.1452 touched on Monday, the pair jumped to a high of 1.1755 on Friday. The pair eventually closed at 1.1720, versus 1.1523 a week earlier.

The British pound also surged emphatically against the greenback during the week ended June 27 amidst strong PMI readings. Data released on Friday had showed a larger-than-expected uptick in manufacturing PMI readings and services PMI reading that matched expectations, The GBP/USD pair which had closed at 1.3450 on June 20 gained 1.98 percent during the week ended June 27 to close at 1.3716. The weekly trading range was wider, between a low of 1.3369 recorded on Monday and a high of 1.3772 recorded on Thursday.

The Australian Dollar jumped 1.24 percent against the U.S. Dollar during the past week despite a larger-than-expected decline in consumer price inflation in the month of May. From the level of 0.6451 recorded on June 20, the pair rose to close the week ended June 27 at 0.6531. During the week, the pair oscillated between a low of 0.6372 recorded on Monday and the high of 0.6565 recorded on Thursday.

The U.S. Dollar weakened heavily against the Japanese Yen also during the week ended June 27. The USD/JPY pair closed the week at 144.67 versus 146.10 a week earlier, registering a decline of 0.98 percent. The pair ranged between the high of 148.04 recorded on Monday and the low of 143.75 recorded on Thursday.

Minutes of the recent meeting of Bank of Japan showed the central bank contemplating further reduction in its purchase of Japanese government bonds. The central bank also appeared inclined to continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with the improvement in economic activity and prices.

Ahead of the release of key economic data from the U.S. including ISM Manufacturing PMI, JOLTS job openings, non-farm payrolls and ISM Services PMI, the 6-currency Dollar Index has extended losses. It is currently trading at 97.30 after touching a day-low of 96.97 which is the lowest level since March 2022.

Amidst the Dollar's movements, the EUR/USD pair has slipped to 1.1713 from 1.1720 on Friday. The GBP/USD pair has however declined to 1.3688 from 1.3716 at close on Friday. The AUD/USD pair has edged down to 0.6530 versus 0.6531 at close on Friday. The USD/JPY pair has slipped to 144.45 from the level of 144.67 recorded at the end of the previous week.