The U.S. dollar is on track for its second consecutive weekly gain, supported by robust domestic economic data that suggests the Federal Reserve may delay further interest rate cuts this year. As of early Friday trading, the Dollar Index stood firm at 98.456, maintaining its weekly gain of 0.64%, following a 0.91% advance the previous week.
Data released this week painted a resilient picture of the U.S. economy. Retail sales in June beat expectations, and initial jobless claims dropped to a three-month low. A separate report showed consumer prices rose at the fastest pace in five months, hinting that tariff-related inflationary pressures may be creeping in.
These developments have led markets to revise their expectations for rate cuts. Traders now price in around 45 basis points of rate reductions for the remainder of 2025—down from 50 earlier this week.
However, the greenback’s outlook is not without risks. The Trump administration’s fiscal spending spree, tax cuts, and erratic trade strategies have rattled investor confidence. At one point this week, the dollar dropped sharply on reports that President Trump intended to fire Federal Reserve Chair Jerome Powell—rumors he later denied. The incident underscores persistent fears about the independence of the Fed and U.S. fiscal credibility.
Meanwhile, the Japanese yen continues to struggle, weighed down by political uncertainty ahead of Sunday’s upper house elections. The ruling coalition, led by Prime Minister Shigeru Ishiba, is at risk of losing its majority, which could create roadblocks in ongoing tariff negotiations with the U.S.
The dollar held steady at ¥148.60, just shy of Wednesday’s 3.5-month high of ¥149.19. For the week, the dollar has climbed 0.73% against the yen.
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On the European front, the euro recovered slightly, up 0.25% to $1.1626, after falling to a three-week low of $1.1556 on Thursday. It still remains down 0.59% for the week. The British pound edged up 0.13% to $1.3436, trimming its weekly decline to 0.41%.
In the crypto world, Bitcoin hovered just under $120,000, following a record high of $123,153.22 earlier in the week. Sentiment was lifted after Congress passed a bill establishing a framework for dollar-pegged stablecoins, potentially paving the way for institutional adoption.
