US Dollar Index Struggles Below 99.00 as Recession Fears Mount After Weak Data

US Dollar Index Remains Under Pressure Below 99.00

DXY Consolidates Losses After Bearish Reversal

The US Dollar Index (DXY) stays subdued below the 99.00 mark in Thursday’s trading, consolidating losses from Wednesday’s sharp pullback. Weak economic data and lingering trade tensions have dented sentiment around the US Dollar.

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US Services Sector Contracts Unexpectedly

The ISM Services PMI for May fell to 49.9, down from 51.6 in April, and below market expectations of a 52.0 reading. This marked the first contraction in nearly a year, signaling that the US services sector—a key pillar of the economy—is losing momentum.

Coupled with disappointing employment figures from ADP earlier in the week, this data has revived recession fears and led to a more cautious tone in USD trading.

Trade Tensions Add to Dollar Headwinds

The lack of progress in trade negotiations, especially between the US and China, continues to add downward pressure on the Dollar. Heightened tariff uncertainty and policy instability have traders favoring safer assets, contributing to DXY weakness.

Explore More: See how trade policy affects currency strength in our Trade & Forex Insight Series.

What’s Next for the Dollar?

• Can DXY hold support at 98.50 amid growing recession fears?
• Will NFP data shift market expectations?
• Is the Fed’s next move already priced into the Dollar?