FX.co ★ Dollar Remains Subdued

The dollar index remained below 99 on Wednesday, as investors evaluated recent trade developments and comments from Federal Reserve Chair Jerome Powell, which bolstered expectations of further interest rate cuts. Treasury Secretary Scott Bessent suggested an extended pause on the high U.S. tariffs imposed on Chinese goods, proposing this as a trade-off for China delaying its planned restrictions on rare earth exports. This proposal provided some relief to investors amid ongoing tensions. The suggestion came in the wake of heightened trade disputes, with President Trump threatening an embargo on cooking oil in retaliation for China's boycott of soybeans. In terms of monetary policy, Chair Powell highlighted rising risks to employment on Tuesday, intensifying market predictions of additional easing measures. The likelihood of another 25-basis-point rate cut by the Federal Reserve this month is currently estimated at around 97%. Concurrently, the euro strengthened following France's proposal to suspend significant pension reforms, while the yen gained ground as traders reversed positions in the "Takaichi trade."