The Bloomberg Dollar Index edged lower on Friday, as the lower-than-expected U.S. core CPI reading for March alleviated pressure on the Federal Reserve to tighten monetary policy. The index declined 1.4% for the week, marking its largest weekly drop in over two months.
The Bloomberg Dollar Spot Index fell 0.1%, extending its losing streak to five consecutive days and posting its worst weekly performance since January 23.
Valentin Marinov, Head of G10 FX Research and Strategy at Credit Agricole, noted that since the outbreak of the Iran conflict, the U.S. dollar "has been at a disadvantage across the board in terms of nominal interest rates, and today’s CPI data may further amplify this trend."
However, he also pointed out, "The current movements in the foreign exchange market largely depend on the upcoming U.S.-Iran negotiations scheduled for this weekend."
Lee Hardman, FX Strategist at MUFG, wrote in a report that ongoing attacks in the Middle East highlight that "the path to a long-term peace agreement still faces significant obstacles, and it remains unclear when energy supplies through the Strait of Hormuz can resume."
He added, "This persistent uncertainty may restrain further short-term gains in high-beta currencies."
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