USD Under Pressure as Fed Doves Weigh on Hawkish Sentiment

The US Dollar (USD) continues to struggle under the weight of dovish signals from Federal Reserve officials, even as Fed Chair Jerome Powell wrapped up his two-day testimony before Congress with no clear commitment to rate cuts.

🕊️ Easing Geopolitical Risks, Dovish Tilt Hit USD

With geopolitical tensions de-escalating, investors have turned their focus to US monetary policy. Despite Powell’s cautious comments about tariffs and inflation, the market narrative has shifted toward a more dovish outlook, encouraging short positions on the greenback.

"Fed policy appears increasingly divided, and the market is clearly responding to the dovish faction within the FOMC," noted analysts.

Powell Repeats Conditional Hawkish Stance

While Powell expressed concerns over tariffs' inflationary impact, he refrained from hinting at immediate policy shifts. His emphasis on data-dependence reinforced that any future easing would require clear macroeconomic justification, keeping the official tone hawkish — but only conditionally.

Market Implications: USD Remains Vulnerable

As dovish rhetoric gains traction, expectations for future interest rate cuts are rising. The USD Index continues to test key support levels, and further softness may ensue if upcoming data — particularly on inflation and employment — underwhelms.

Related Reads on Tredu:

• Will Powell's Fed Shift to Full Dovish Mode?
• USD Analysis: Bearish Trend or Temporary Dip?
• Geopolitics and Forex: How Peace Moves the Market

Conclusion: Until the Fed provides firmer guidance, markets may continue to challenge the hawkish narrative with rate cut pricing — leaving the USD vulnerable to ongoing weakness.

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