FX.co ★ Dollar Heads for Sharp Weekly Decline

The dollar index lingered around 97.5 on Friday yet remained poised for a substantial weekly decline, as traders assessed evolving trade developments and anticipated the upcoming Federal Reserve policy meeting. Current reports suggest that US and EU officials are close to finalizing a trade deal that would implement a 15% tariff on most EU goods, reflecting a similar arrangement recently concluded with Japan. Regarding monetary policy, the Federal Reserve is broadly anticipated to maintain interest rates at their current levels next week while evaluating the inflationary effects of newly imposed tariffs. Concurrently, President Donald Trump has moderated his position on Federal Reserve Chair Jerome Powell following an unprecedented visit to the central bank’s headquarters, declaring no intention to dismiss him. Market expectations are currently factoring in 43 basis points of rate cuts by the close of 2025, with reductions anticipated to occur in both September and December.