Opinion: The Fed's Cautious Approach to Rate Cuts May Not Necessarily Strengthen the Dollar

Mitsubishi UFJ Bank analyst Halpenny stated in a report that if the Federal Reserve remains cautious about the possibility of interest rate cuts in the coming months during Wednesday's meeting, the dollar may not necessarily appreciate. He noted that the euro has strengthened since early April, despite the yield spread between EU and US two-year government bonds moving in favor of the US. This suggests that cautious signals regarding rate cuts may not necessarily boost the dollar. Halpenny mentioned that policy uncertainty and strong expectations of a weakening US economy mean the dollar may remain weak or weaken further.