FX.co ★ Dollar Tracks Treasury Yields Lower

The US dollar index fell toward 101.5 on Friday, extending its decline for a third straight session as Treasury yields retreated. The drop in yields came amid a global selloff in technology and artificial intelligence shares, which drove investors toward the relative safety of government bonds. Risk aversion intensified after disappointing earnings from major technology firms, including Alphabet, Amazon, and Intel, heightening worries about the sustainability of massive AI-related investment.

At the same time, US data released on Thursday showed the PCE price index rising 0.5% in September, its largest monthly gain since March, reinforcing expectations that the Federal Reserve may raise interest rates again later this year. While the Fed left rates unchanged on Wednesday, futures markets still assign roughly a 75% probability to a rate hike in December, according to the CME FedWatch Tool.