Dollar Faces Pressure Amid Federal Reserve Changes and Economic Concerns

The dollar remained steady but was set for a weekly decline as President Trump's temporary Federal Reserve governor nomination raised hopes for interest rate cuts. Economic slowdown fears and the potential dovish leadership at the Fed contributed to the dollar's challenge, despite central bank independence being a priority.

The dollar held its ground on Friday but was on track for a weekly dip as U.S. President Trump's interim pick for a Federal Reserve governor fueled expectations of a dovish successor to Jerome Powell. This prospect, coupled with concerns over the U.S. economy's sluggish performance, particularly in the labor market, has increased hopes for rate cuts.

On the daily scale, the dollar index remained nearly static at 98.1. Trump's nomination of Council of Economic Advisers Chairman Stephen Miran to a new Federal Reserve post intensified scrutiny on the central bank's future. However, analysts suggest that Miran's appointment may not significantly affect the Fed's independence, which remains intact according to market experts.

Investor attention will now pivot to the upcoming U.S. consumer price inflation data, expected to offer insights into the effects of tariffs on prices. This data will be crucial in determining the Fed's policy trajectory, especially as traders forecast a 93% probability of a rate cut in September.

(With inputs from agencies.)