FX.co ★ Dollar Stabilizes on Bessent Comments

The dollar index stabilized above 96 on Thursday after reaching a four-year low earlier in the week. This shift occurred following Treasury Secretary Scott Bessent's reaffirmation of a "strong dollar policy." His statement diverged from President Trump's previous indications that a weaker currency might be acceptable. Bessent highlighted that robust U.S. economic fundamentals and prudent policies should naturally draw capital inflows, while dismissing any notions of U.S. intervention in the dollar's depreciation against the yen. Recently, the U.S. dollar encountered significant selling pressure, fueled by concerns of potential joint U.S.-Japan currency intervention, President Trump’s remarks, and a range of geopolitical, trade, and monetary policy uncertainties. Concurrently, the Federal Reserve maintained the status quo on interest rates, as anticipated. Chair Powell indicated that the central bank is likely to refrain from rate changes for the foreseeable future. The Fed also observed that economic activity continues to grow at a solid rate, unemployment appears to be stabilizing, and inflation maintains a slightly elevated position.