Dollar declines amid increasing possibilities of a US interest rate cut

The dollar is on track to record its largest weekly decline against other major currencies since July, affected by the increasing possibility of a cut in US interest rates next year, while the euro and the pound received support on Friday as central banks in Europe continue their tendency to tighten monetary policy.

In a week full of central bank decisions, the picture became clearer for traders regarding the possible date for reducing interest rates after Federal Reserve Chairman Jerome Powell said in a meeting on Wednesday that it is likely that the tightening of monetary policy will end, and that discussing the reduction is “under consideration.”

This resulted in a decline in the US currency against other major currencies, as the dollar index recorded 102.01, not far from the lowest level in four months at 101.76 that it touched on Thursday.

The index fell nearly 2 percent and is on track to record the largest weekly decline since July.

The euro recorded $1.0985, which is slightly below the $1.1009 level it touched on Thursday, which was the highest level in two weeks.

The European currency rose 2 percent this week, the largest rise since July.

The British pound recorded $1.2766 in recent transactions, after it rose 1.1 percent and reached the highest level in four months at $1.2793 yesterday, in light of the Bank of England’s tendency to tighten.

Meanwhile, the Japanese yen rose 0.11 percent to 141.70 per dollar, after rising 0.7 percent and touching its highest level in four and a half months at 140.95 on Thursday.

The Asian currency rose 2 percent this week, and is on track to achieve gains for the fifth consecutive week against the dollar. The last similar series of gains was witnessed during the pandemic period in mid-2020.