FX.co ★ Dollar Weakens on CenBank Decisions

The dollar index hovered near 99 on Friday after sliding more than 1% in the previous session, as increasingly hawkish signals from other major central banks boosted their currencies at the dollar’s expense. The European Central Bank, Bank of Japan, and Bank of England all left policy rates unchanged on Thursday but signaled a bias toward tighter monetary policy in response to sustained inflation pressures, particularly from rising oil prices.

The BOJ is widely expected to resume policy normalization soon, while markets now anticipate rate hikes from both the ECB and the BOE later this year. Elsewhere, the Reserve Bank of Australia raised its cash rate for a second consecutive meeting on Tuesday, and the Reserve Bank of New Zealand is now expected to tighten policy sooner than previously thought.

The Federal Reserve also kept rates on hold on Wednesday, with Chair Jerome Powell emphasizing that policymakers must see clearer progress on lowering inflation before considering a return to rate cuts. The dollar index is on track to register a weekly loss of about 1.2%.