Dollar Dips as Fed Indicates Rate Cuts Amid Tariff Uncertainty

The U.S. dollar softened after the Federal Reserve signaled possible interest rate cuts due to economic and tariff uncertainties, while the British pound hit a high ahead of the Bank of England's decision. Economic forecasts remain mixed, with inflation concerns influencing policy stances globally.

The U.S. dollar experienced a decline on Thursday following indications from the Federal Reserve that interest rate cuts could occur later this year. This comes amid ongoing uncertainty surrounding U.S. tariffs, despite expectations of slower economic growth and heightened inflation.

Federal Reserve Chair Jerome Powell emphasized a cautious approach, noting that the current monetary policy is well-positioned to manage existing risks and uncertainties. Meanwhile, the British pound reached a four-month peak, anticipating the Bank of England's policy decision.

Globally, currency markets remained largely steady, with Japan observing a holiday. The U.S. dollar index held firm, while the euro and yen maintained levels close to recent figures. Market dynamics were further influenced by geopolitical tensions and employment statistics from other regions such as Australia and Turkey.

(With inputs from agencies.)