US dollar declines after Fed’s Powell comments regarding interest rates

On Friday, the dollar was heading towards recording its largest weekly decline this year after the head of the Federal Reserve (US central bank) expressed greater confidence about cutting interest rates in the coming months, while the yen rose amid increasing speculation about raising interest rates in Japan.

According to Reuters, traders are awaiting jobs data in the United States, which could confirm or dispel market expectations of a rate cut by June.

On Thursday, the European Central Bank kept its key interest rate at 4% and paved the way for a cut in June. However, the euro rose because investors saw the US as having more room to cut rates.

The euro rose to its highest level in nearly two months at $1.0956 during Asian trading, which brought it back to the middle of the range in which it has been moving for a year. It rose by about 1% against the dollar during the week.

The yen has risen 1.5% since the beginning of the week, its best percentage performance since December, after policymakers hinted at positive indicators for wages and prices, paving the way for the first increase in interest rates in Japan in 17 years.

The yen surpassed its 50-day moving average and reached a one-month high of 147.54 in early Asian trading on Friday.

The weakness of the dollar led to an increase in the Australian and New Zealand dollars by 1.5% and 1.1% during the week, respectively. The British pound rose 1.2% this week to a 2024 high of $1.2820.

The Australian dollar reached its highest level since mid-January at $0.6631, and the New Zealand dollar reached its highest level in a week at $0.6183.