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Market Insights: Dollar Softens Amid Dovish Fed Remarks


US Dollar Retracts After Fed Comments

Yesterday saw the dollar index (DXY00) retreat by -0.20%, pulling back from a 4-1/2 month peak and registering moderate losses. The euro’s strength encouraged traders to unwind long positions in the dollar, with the currency’s downward trajectory further exacerbated by dovish comments from Fed Presidents Daly and Mester, both advocating for three rate cuts this year.

Support from US Economic Reports

The dollar found some support from upbeat US factory orders and job openings reports released on Tuesday. Additionally, rising bond yields lent some bullish sentiment to the dollar, particularly following an increase in the 10-year T-note yield to a 4-month high.

EUROZONE Data Impact on the Euro

Meanwhile, the EUR/USD (^EURUSD) pair saw a +0.19% uptick as the euro rebounded from a recent low. An upward revision to the Eurozone manufacturing PMI contributed to a short-covering rally in the euro, further fueled by the retreat of the dollar from multi-month highs. However, gains in the euro were tempered by a less-than-stellar German Mar CPI report, which hinted at a dovish stance from the ECB.

Geopolitical Tensions Boost Safe-Haven Demand for Precious Metals

On the other hand, June gold (GCM4) closed up +1.09%, reaching a contract high, while May silver (SIK24) climbed +3.39%, hitting a 4-month peak. The weakening dollar acted as a tailwind for precious metals, with geopolitical uncertainties – including an Israeli airstrike on Iranian targets and Iran’s subsequent threats of retaliation – driving up safe-haven demand. Moreover, Tuesday’s decline in the stock market further fueled the appeal of precious metals as a safe bet. Notably, inflation concerns pushed investors towards gold, positioning it as a hedge against inflation. Silver also gained support from an uptick in copper prices.


The currency market’s recent movements underscore the impact of geopolitical tensions and economic data on investor sentiment. As the market reacts to dovish signals from the Fed and assesses economic indicators in the US and Eurozone, traders are recalibrating their positions across currencies and precious metals.

More Precious Metal News from Barchart

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.