The US dollar experienced a widespread decline on Thursday following comments from Federal Reserve Chair Jerome Powell, who stated that the central bank is approaching the confidence level needed to initiate interest rate cuts with the aim of reaching the 2% inflation goal.
Despite initial hesitation, the euro rebounded and achieved its most significant daily gain against the dollar in about a month, reaching a six-week high.
In a hearing before the Senate Banking Committee, Powell expressed the need for confidence in sustainable inflation before considering a reduction in restrictions to avoid economic recession.
Powell's more dovish tone compared to the previous day contributed to the dollar's weakening, alongside investors' increased appetite for riskier assets.
The euro strengthened by 0.45% against the dollar, reaching $1.0944, while the European Central Bank laid the groundwork for potential rate cuts later in the year. ECB President Christine Lagarde indicated progress toward the inflation target but emphasized insufficient confidence for immediate action.
The yen saw its most significant jump against the dollar in 2024 amid speculation that the Bank of Japan might raise rates this month. The dollar depreciated against the yen by 0.92%, reaching 148.04, the weakest in over a month.
The pound experienced a 0.58% rise against the dollar following UK Finance Minister Jeremy Hunt's spring budget announcement, which included tax cuts. However, market attention remains focused on the overall direction of the US dollar.
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