The US dollar fell in European trade on Tuesday against a basket of major rivals, sharpening the decline for the seventh straight session and plumbing five-month lows amid concerns about US recession.
Conversely, the euro continues to shine and attract investments, hitting four-month highs on hopes for massive new German stimulus plans.
The US labor sector also weakened unexpectedly last month, bolstering the odds of a Fed rate cut in the first half of the year.
The Index
The dollar index fell 0..5% to 103.33, the lowest since October 2024, with a session-high at 103.92.
On Monday, the index lost 0.1%, the sixth loss in a row as US treasury yields declined.
Growth Concerns
Investors are worried about slower US growth after aggressive tariffs on major trade partners, while recent labor data and government layoffs raised more concerns.
US Treasury Secretary Scott Bessent said the economy might slow down as it shifts from government spending to private investments, and reaches a more sustainable balance.
He believes that some tariff levels will always be necessary to fix some economic imbalances around the world and secure more stable supply chains.
President Trump said during a Fox News interview that the US is undergoing a transition phase, with return of wealth to the US through trade and economic policies, including tariffs to boost local industry.
US Rates
Fed Chair Jerome Powell said it remains to be seen whether Trump’s tariff plans will be inflationary.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in March stood at just 3%.
Now investors await important US inflation data this week to gather more clues.
Euro Shines
The euro surged above $1.09 for the first time this year, hitting four-month highs and on track for more gains on hopes for more eurozone investments, especially on defense.
The German coalition parties are preparing to pass a huge infrastructure and military spending plan to jumpstart the economy and bolster European defense against Russian threats.
