US Dollar Index hovers near 99.50 as trading activity remains muted due to Good Friday

• The US Dollar Index remains under pressure as concerns mount over the economic fallout from tariffs on the United States.
• The CME FedWatch Tool shows that traders are now anticipating the first Fed rate cut to occur in July.
• President Trump stated that a trade deal with China could be finalized within the next three to four weeks.

The US Dollar Index (DXY), which measures the US Dollar (USD) against a basket of six major currencies, is remaining below 99.50 during the early European hours on Friday. The Greenback remains subdued amid growing concerns over the economic impact of tariffs on the United States (US). Market participants are closely monitoring developments in US trade negotiations, although trading activity is expected to be subdued due to the Good Friday holiday.

However, the US Dollar gained some support after hawkish remarks from Federal Reserve Chair Jerome Powell, who cautioned that a sluggish economy combined with persistent inflation could complicate the Fed's policy goals and heighten the risk of stagflation. Meanwhile, President Donald Trump criticized Powell for being too slow to cut interest rates, adding that his removal "can't come quickly enough."

According to the CME FedWatch tool, money market traders are currently pricing in around 86 basis points of Fed rate cuts by the end of 2025, with the first reduction anticipated in July.

US President Donald Trump stated on Thursday that China had made multiple overtures and added, "I don't want to go higher on China tariffs. If China tariffs go higher, people won't buy." Trump expressed optimism that a trade agreement with China could be reached within three to four weeks.

On the labor front, the US Department of Labor reported Thursday that Initial Jobless Claims fell to 215,000 for the week ending April 12, below expectations and down from the previous week's revised figure of 224,000 (originally 223,000). However, Continuing Jobless Claims rose by 41,000 to 1.885 million for the week ending April 5.