The US dollar fell to its weakest level in six weeks on Tuesday, dropping below 98.50 on its index, as traders waited for March Producer Price Index (PPI) figures that could shape expectations for Federal Reserve policy later this year.
dollar under broad pressure across majors
The greenback extended Monday’s losses, when it erased a brief intraday rebound and finished the session lower across most major pairs.
Over the past week, the dollar has declined:
- 1.42% against both the Australian dollar and the New Zealand dollar
- 0.97% against the British pound
- 0.89% versus the euro
- 1.04% against the Swiss franc
- 0.64% against the Canadian dollar
- 0.24% versus the Japanese yen
The sustained move below 98.50 has created a supportive backdrop for dollar-priced assets, particularly those outside traditional financial channels, as weaker US currency levels lower the effective cost of these assets in other currencies.
inflation data seen as key turning point for dollar
Market focus is now fixed on the US PPI release due later Tuesday. Many in the market expect the data to confirm that inflation is peaking, which would bolster the case for the Fed to soften its policy stance later in the year.
This release is seen as a potential inflection point:
- A stronger-than-expected print would likely trigger a sharp rebound in the dollar and pressure higher-risk, high-beta assets.
- A softer reading could accelerate the current dollar downtrend and reinforce risk-on positioning across multiple asset classes.
washington–tehran talks add geopolitical layer
Geopolitical developments are adding another dimension to the outlook.
Late Monday, President Trump said the administration had been contacted by “the right people on Iran” and that efforts toward a possible deal were underway as a blockade in the Strait of Hormuz began. Vice President Vance said talks had made progress but stopped short of a full accord, noting that a framework could be reached if Tehran agreed to extend its commitments.
Weekend reports suggested Iran’s negotiators proposed halting nuclear activities for five years, while the US side pushed for a 20-year suspension. Talks are expected to continue this week, with intermediaries shuttling between the parties.
A successful agreement could reduce oil price volatility and improve global risk sentiment, supporting markets that tend to benefit from macroeconomic stability. A breakdown, by contrast, would likely revive uncertainty that typically channels demand back into traditional safe havens.
mixed wall street close, steady futures
US equity markets ended Monday’s session mixed:
- The S&P 500 dipped about 0.1%
- The Nasdaq Composite rose more than 1%
US stock index futures showed little change in early Tuesday trading, suggesting a cautious tone ahead of the inflation release.
The combination of a softer dollar and strength in the tech-heavy Nasdaq, alongside firm precious metals, highlights a selective preference for assets seen as both growth-oriented and, at the same time, partial hedges against currency and policy risk.
asian data and currency moves
In Asia, Japan reported that industrial production fell 2% month-on-month in February, slightly better than forecasts of a 2.1% decline.
The yen strengthened modestly in response, with USD/JPY hovering around 159.20 during the European morning session.
euro and pound supported ahead of central bank speeches
The euro held near 1.1800, its strongest level since March 2, amid anticipation of comments from European Central Bank officials, including President Christine Lagarde, scheduled later in the day.
The British pound traded above 1.3500 after rising more than 0.3% on Monday. Bank of England Governor Andrew Bailey is due to speak at an event in New York, with markets watching for any hints on the UK rate path.
Remarks from Lagarde and Bailey will be closely tracked, as any unexpected hawkish or dovish signals could move the euro and pound and feed back into the dollar index’s next directional shift.
gold extends rebound, oil holds in tight range
Gold extended its rally from below $4,650 an ounce and moved toward $4,800, drawing support from broad dollar weakness and ongoing demand for perceived hedges against currency debasement and policy uncertainty.
Oil prices were stable, with West Texas Intermediate crude trading just under $93 a barrel in a narrow range. A durable diplomatic breakthrough between Washington and Tehran could ease supply concerns and dampen volatility in crude, while renewed tensions could reignite price swings.
digital asset flows track dollar slide
Beyond traditional markets, risk appetite has also been visible in digital finance.
Data from analytics firm Digital Asset Metric Systems, published last week, showed:
- Net inflows into decentralized financial protocols rose 12% over the past 30 days, a period that largely overlaps with the dollar’s recent decline.
- Open interest in perpetual futures tied to these assets climbed to a six-month high of $58.4 billion, signaling elevated speculative activity.
These flows align with the broader pattern of capital seeking both higher growth potential and insulation from conventional sovereign policies as the dollar weakens.
outlook: all eyes on inflation and policy signals
For now, the next catalyst for currency and risk assets is the US PPI release later Tuesday. Alongside that, traders will be watching:
- Any concrete progress or setbacks in US–Iran negotiations
- Speeches from ECB President Lagarde and BoE Governor Bailey
- Subsequent Fed commentary if inflation data surprises in either direction
Together, these factors will help determine whether the dollar’s slide below 98.50 marks the start of a more extended downtrend or simply a pause before a renewed move higher.
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