US Dollar Index Holds Below 99.50 as Market Activity Slows for Good Friday

The US Dollar Index (DXY), which tracks the value of the US Dollar (USD) against six major currencies, remains below 99.50 during the early European session on Friday. The US Dollar is under pressure due to concerns over the economic impact of tariffs on the United States. Traders are closely watching the ongoing US trade talks, but with the Good Friday holiday, market activity is expected to be light.

The US Dollar found some support after hawkish comments from Federal Reserve Chair Jerome Powell, who warned that a weak economy coupled with high inflation could complicate the Fed’s policy objectives and increase the risk of stagflation. Meanwhile, President Donald Trump criticized Powell for not cutting interest rates quickly enough and stated that Powell’s removal “can’t come fast enough.”

Based on the CME FedWatch tool, traders are pricing in about 86 basis points of rate cuts by the Fed by the end of 2025, with the first rate cut expected in July. President Trump also commented on China, stating that the country had made several attempts at negotiations and expressed hope that a trade agreement could be reached in the next three to four weeks, adding that if tariffs on China were to rise further, it would impact consumer buying behavior.

On the labor front, the US Department of Labor reported a decrease in Initial Jobless Claims to 215,000 for the week ending April 12, below expectations and down from the revised figure of 224,000 the previous week. However, Continuing Jobless Claims increased by 41,000 to 1.885 million for the week ending April 5.

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