Dollar Dilemma: Tariffs, Tensions, and Economic Woes

The U.S. dollar hit six-week lows as weak economic data suggested slow growth and inflation fears, coinciding with trade tensions. A possible ECB interest rate cut looms, while U.S. payroll figures are awaited. Investors speculate on further Fed rate cuts as global trade negotiations continue to stall.

The U.S. dollar softened on Thursday, reaching its lowest point in six weeks after disappointing economic data revived concerns about sluggish growth and persistent inflation. The news comes as the euro remained steady in anticipation of an expected interest rate decrease from the European Central Bank.

Economic reports revealed a decline in the U.S. services sector and a softening labor market in May, fueling a rally in U.S. Treasury bonds. This movement saw the dollar slightly decline against the yen, while the euro and sterling approached recent highs.

President Trump's trade policies have influenced investors to seek alternatives to U.S. assets. As the dollar struggles, market participants eagerly await Friday's employment data for further insights into economic health, with projections indicating limited job growth.

(With inputs from agencies.)