The U.S. dollar edged lower on Monday, nearing a five-month low as market concerns mount over potential economic slowdown linked to U.S. trade policies. At 08:05 ET (12:05 GMT), the Dollar Index fell 0.2% to 103.162, hovering close to last week’s five-month trough.
The greenback has declined nearly 5% this year amid fears that sweeping tariffs under the Trump administration could weigh on growth. Friday’s data showing U.S. consumer sentiment hitting a 2.5-year low in March further fueled those concerns.
Adding to market jitters, Treasury Secretary Scott Bessent said Sunday there are “no guarantees” the U.S. will avoid recession in 2025—echoing President Trump’s recent reluctance to rule one out. Investors are now watching upcoming U.S. retail sales data and Wednesday’s Federal Reserve policy meeting for further clues.
Analysts expect no major Fed policy changes but see a slight upside risk for the dollar if the Fed reiterates just two 25bps rate cuts this year—less than the 61bps currently priced in. Fed Chair Jerome Powell is also expected to deliver reassuring messaging for markets.
Euro, Pound Gain on Policy Hopes
EUR/USD rose 0.2% to 1.0907 as optimism grew around Germany’s proposed infrastructure investment plan and debt reform. A vote in parliament this week could drive EUR/USD toward the 1.0930–1.0950 range, though ING forecasts potential pressure in April due to U.S. trade tariffs.
GBP/USD climbed 0.3% to 1.2970, supported by dollar weakness. The Bank of England is expected to keep rates steady Thursday. Analysts anticipate dovish re-pricing, especially with the UK Spring Statement due next week.
Yen and Yuan Steady
USD/JPY slipped 0.1% to 148.47 ahead of the Bank of Japan’s rate decision. Meanwhile, USD/CNY eased 0.1% to 7.2312 after China announced a sweeping domestic consumption plan to boost growth.
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