US Dollar Weakens Ahead of Consumer Sentiment Data Amid Geopolitical Tensions

US Dollar Faces Pressure Ahead of Consumer Sentiment Data Amid Economic Slowdown and Geopolitical Tensions

The US Dollar Index (DXY) is struggling to maintain its positive momentum, sitting at approximately 100.62 on Friday. Despite starting the week strong, the DXY is facing downward pressure as market participants begin to question the sustainability of the US Dollar’s strength. Traders are growing increasingly uncertain due to conflicting statements and policies from the Trump administration, particularly regarding its tariff policy and trade agreements.

The US Dollar experienced a decline on Thursday following disappointing economic data. The Producer Price Index (PPI) data revealed that prices in April fell unexpectedly compared to the previous month, while Retail Sales growth slowed significantly to just 0.1% in April, following a 1.5% increase in March. This slowdown in both price pressures and consumer spending has led investors to question the US economy's resilience.

On the geopolitical front, the ongoing Russia-Ukraine dispute continues to weigh on market sentiment. Peace talks between Ukrainian President Volodymyr Zelenskyy and Turkish President Recep Tayyip Erdoğan in Ankara failed to yield significant results, as Russian President Vladimir Putin did not attend the meeting. Tensions remain high, with the possibility of more sanctions on Russia being discussed, putting further pressure on the US Dollar.

Traders are now waiting for the release of the US Consumer Sentiment data, which is expected to provide further clues about the economic outlook and the direction of the US Dollar in the near future.