The US dollar is suffering some losses due to economic reports!

The US Dollar Index witnessed a significant decline at the beginning of the weekly trading, influenced by the release of some US economic data that contributed to weakening demand for the US currency.

Here are the key factors influencing the dollar's movement today:

Reports on US tariffs negatively impact the dollar

Recent reports regarding US tariffs have negatively affected the dollar’s movements. The Washington Post reported that President-elect Donald Trump's team is considering plans to impose new tariffs targeting only essential imports. Reports indicate that these discussions focus on imposing tariffs on all countries, emphasizing essential goods and sectors that are critical to the national and economic security of the United States.

These reports have alleviated concerns related to tariffs on US imports, suggesting the possibility of continued decrease in inflationary pressures in the US. This could encourage the Federal Reserve to maintain a policy of interest rate cuts throughout this year, negatively impacting the dollar's performance.

Negative economic data drives the dollar down

The dollar was also impacted by some negative economic data, as S&P Global recently released the final data for the Services Purchasing Managers' Index (PMI) in the US for December, which showed that the index fell short of expectations.

The Services PMI recorded 56.8 points in December, lower than the expected 58.5 points, while the November reading had recorded 58.5 points. This data raised concerns about the impact of rising interest rates on the US economy, increasing the likelihood that the Federal Reserve will continue to lower rates, which negatively reflected in dollar trading.

Interest rate expectations support the dollar's decline:

Expectations regarding monetary policy to reduce support for the dollar have strengthened, as the FedWatch tool indicates a 90.9% chance that the Federal Reserve will maintain interest rates at 4.50% in the upcoming meeting, while the odds of a 25 basis point rate cut stand at 9.1%. This expectation reinforces market confidence in the continuation of the US interest rate cut path.

Performance of the US Dollar Index:

With these developments, the US Dollar Index recorded a decline of 0.57%, reaching 108.30 points during current trading. Investors continue to monitor upcoming economic data, particularly the US employment data set to be released at the end of the week, which may influence the index's trends over the coming days.

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