FX.co ★ DXY Trims Sharper Losses

On the first day of July, the dollar index reduced its early losses but stayed below 97, hovering near its lowest point since 2022. This follows the dollar's nearly 10% decline over the first half of the year. The Senate has approved President Trump's Tax bill, which involves a $3.3 trillion deficit, and now awaits approval from the House, raising concerns about unsustainable debt issuance. Meanwhile, there is still ambiguity surrounding tariffs, as officials have refrained from publicizing any new trade agreements. On the topic of monetary policy, Federal Reserve Chairman Jerome Powell reiterated a cautious 'wait-and-see' approach at the ECB Forum on Central Banking. Powell mentioned an expected rise in inflation over the summer, but stressed the Fed's deliberate patience in its response. He also noted that most Fed officials believe it will probably be appropriate to lower interest rates later in the year. Currently, markets are anticipating a 25 basis points rate cut in September, with increasing expectations for two more cuts by the end of the year.