Dollar near 3.5-year low amid rate cut bets

The dollar hovered near 3.5-year lows against the euro and the pound today, as traders bet on deeper US interest rate cuts as they anticipate trade deals before President Donald Trump’s tariff deadline next month.

The market’s focus this week is on US monetary policy. The possibility that Trump will announce early his pick for the next Federal Reserve chair, who is expected to be more dovish, has increased the likelihood of the central bank cutting interest rates.

Current Fed Chair Jerome Powell’s congressional testimony this week was also interpreted as suggesting he has become more dovish, increasing expectations for a rate cut, according to Reuters.