The pressure is mounting on the U.S. dollar as we approach June’s sunset, depicting changing foreign currency market expectations. The sharp fall in the USD Index over almost two weeks set off alarm bells about interest rates and inflation figures. Traders are repositioning themselves ahead of the main speeches by central-bank chiefs, along with important new economic data from across the U.S. and Europe.
Dollar Faces Downward Momentum as H1 Closes
The USD index lost much in June
In the month of June, the data shows losses of more than 1.5% in less than a week, pushing the index down to 97.00. This is a level not seen since March 2022, and in the coming weeks since the start of 2025, it will bring a drastic reduction. Gains and losses on an intraday basis in 2025 were about 12%, representing the considerable fear about the future of US monetary policy. With Fed rate cut bets gathering steam, traders are shifting money into higher-yielding or more stable currencies worldwide.
Fed rate cut bets weigh on the dollar sentiment
Such potential rate cuts from the Fed are increasingly taken into consideration by the markets, subsequently taking the US dollar lower in currency pairs. The central bank speeches this week will be scrutinised for any changes in their policy tone. In the short term, demand for USD-denominated assets has lessened with investors looking for lower rates. If the slowdown continues, U.S. figures such as the Dallas Fed Manufacturing Index may further confirm such projections.
Dallas Fed Manufacturing Index
EUR, GBP, CHF Lead the Gains Against USD
Named the top performers against the US dollar this month by the FX market wrap H1, the euro, Swiss franc, and pound sterling stand out. Stronger Eurozone optimism and stable ECB policies have kept EUR/USD away from 1.1700. The pound remains unchanged at 1.3700 post-UK-US trade pact and tariff changes for selected industries. The CHF has changed by more than 3% compared to USD this month due to strong demand for safe havens amid global uncertainty.
The Canadian dollar and the Japanese yen are rising together
Despite having a raft of poor economic data, the Japanese yen maintained its stability, trading below 144.00 per US dollar. During trade talks, the Japanese negotiators put up a strong front for the maintenance of their national interest while trying to instil much confidence in the yen.
The USD/CAD faced some slight pressure following Canada’s announcement to put aside the digital services tax so as to smooth the trade negotiation process with the United States. On July 21, Canadian leaders, among them Prime Minister Mark Carney, intend to have struck an agreement with the United States.
Canadian dollar and the Japanese yen
Rebound of Gold Experiences Start to the Weak Ending
Gold braved a dip below $3,250 and then wrangled back to $3,300 in disagreement over inflation outlooks and rate projections. With gold trending up from the downward slide in the dollar, they are expected to provide some cover against possible geopolitical shocks and currency shocks.
Even though momentum has been rather cautious, in the dawn of H2 trading, investors favour gold in terms of relative safety. If this dollar pressure stays on, the more risk-averse stance may put a floor of support for gold through the coming sessions.
USD Forecast in H2
Poor economic data and shifting Fed expectations cast doubts on the dollar’s eventual fate as the first half of the year closes. The traders will focus on GDP, inflation, and central bank policy in the coming weeks. The continued drop in the USD Index for the month of June makes it clear how volatile the market has been and the importance of currency diversification.
Fed members’ comments may bring some clarity, but a majority of economists are now looking for some softening before the end of the year. As we work our way through 2025, U.S. dollar pressure is expected to continue being a dominant trend across offshore FX markets.
Also Read: AUD/USD Outlook RBA Cut Likely After Soft CPI
Review: The First Half Concluded Amidst Dollar Weakness.
The US dollar likely faces increasing pressure through the final half of 2025, while Fed expectations are turning around along with global economic patterns. Growing anticipation of rate cuts coupled with worsening US data releases account for the sharp drop in the USD Index in June. Meanwhile, investors benchmarked against fear, with gold moving up and currencies such as the euro, pound, yen, and franc all greater than the dollar by some measure.
With developments in trade and speeches of well-known central banks to come down the line, the FX market wrap for H1 speaks volumes about an upheaval. Everyone’s attention is now focused on H2, as inflation and policy changes will determine the next phase of global currency swings.
