FX.co ★ US Dollar Index Halts Decline

The dollar index reached the 98 mark on Wednesday, pausing its decline after nearing three-year lows the previous day. This development comes as markets continue to evaluate the Federal Reserve's monetary policy direction. In his inaugural testimony to Congress, Chairman Powell mentioned that the uncertain economic landscape has prompted Federal Open Market Committee (FOMC) members to hold off on deciding on a definite rate path until there is more clarity on trade policy. Nonetheless, Powell indicated that the absence of tariffs supports a disinflationary perspective, which would justify rate cuts if the White House opts not to reimplement tariffs by the July 9th deadline. Meanwhile, oil and LNG tankers maintained passage through the Strait of Hormuz despite a temporary escalation in the conflict between Iran and Israel, which led to a sharp drop in energy prices and increased speculation of lower inflation in the U.S. On the international front, economic indicators continued to support rate cuts by G10 central banks, thus preventing further weakening of the U.S. dollar.