Dollar Declines Amid Weak Economic Data and Persistent Trade Uncertainty

The dollar fell on Thursday after weak US economic data renewed concerns about slowing growth and rising inflation, while the euro held steady ahead of an expected interest rate cut by the European Central Bank.

The weak data, which showed the US services sector contracted for the first time in nearly a year in May and a slowing labor market, pushed up US Treasury yields and increased the likelihood of a Federal Reserve rate cut this year.

The dollar index, which measures the greenback’s performance against six major currencies, fell to 98.87, down about 9% this year and on track for its weakest annual performance since 2017.

The dollar edged up slightly against the Japanese yen to 143 yen, while the euro reached 1.1412 to the dollar, not far from the six-week high reached earlier this week. The pound last traded at 1.3544 to the dollar.