Dollar Hits Two-Month Low

2026-05-01 14:32 By Joana Ferreira 1 min. read

The dollar index fell below 98 on Friday, hitting its lowest level since late February, after posting its largest one-day decline since mid-March in the previous session.

The drop was largely driven by a sharp rally in the yen, following suspected intervention by Japanese authorities.

Reports indicated that US officials had been notified in advance, aligning with the G7 practice of coordinating major currency interventions.

On the economic front, fresh data revealed that US manufacturing growth was unchanged at a four-year high in April, amid a strong new order growth, further lengthening of supplier deliveries, and a sharp rise in price pressures amid the ongoing Iran conflict.

On monetary policy, Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari both expressed concerns that the Fed’s latest policy statement was too dovish, underscoring the potential challenges incoming Fed Chair Kevin Warsh may face if he attempts to lower interest rates.



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The dollar index rebounded to 100.3 on Friday but remained down nearly 1.5% for the week, marking its worst weekly performance in three months and bringing its monthly decline to 1.3%. The greenback came under pressure as investors questioned whether the Federal Reserve is doing enough to bring inflation back to target. The Fed left the federal funds rate unchanged for a fifth consecutive meeting this week. While Chair Warsh reiterated the central bank's commitment to restoring price stability, he offered little guidance on the policy outlook for the remainder of the year. As a result, expectations for a rate hike at the September meeting eased, although markets continue to price in roughly a two-thirds probability of a 25bps increase.
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The dollar index extended its losses to around 100.3 on Thursday, its lowest level in about six weeks, after falling 0.6% in the previous session. Investors continued to assess the latest FOMC decision and Fed Chair Warsh's press conference. As expected, the Fed left the federal funds rate unchanged, although three FOMC members voted in favor of a rate hike. While Chair Warsh reiterated the Fed's commitment to bringing inflation under control and stressed that policymakers would not hesitate to act if necessary, he was not among those advocating an immediate increase and refrained from providing clear forward guidance. As a result, investors further scaled back expectations for an imminent rate hike and increasingly viewed the central bank as merely postponing what they see as an inevitable increase in borrowing costs. The implied probability of a 25-basis-point hike in September has fallen to around 55%, down from nearly 80% before the Fed's decision.
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