Dollar Caught Between Rate Cuts, Resilience, and Trade Fears

The US dollar is stuck in a holding pattern around 106.00, awaiting a clear catalyst. Geopolitical events, particularly the Ukraine-Russia peace talks, are being closely watched for their impact on market sentiment. Mixed economic signals are adding to the uncertainty.

Weak retail sales have fueled expectations of rate cuts in 2025, but robust consumer spending, supported by wage growth and a strong labor market, paints a different picture. Traders are eyeing upcoming PMI data for clearer economic signals. Despite moderating inflation, Fed officials are cautioning against premature rate cut assumptions. Adding to the mix, lingering tariff concerns and a bearish technical outlook further complicate the dollar’s trajectory.