The US dollar fell in European trade on Thursday, resuming the cycle of downward correction away from a five-week high as US 10-year treasury yields slowed down.

Now investors await crucial US data and remarks by Fed Chair Jerome Powell later today, expected to provide important clues on the path ahead for US interest rates.

The Index

The dollar index fell 0.4% today to 100.59, with a session-high at 101.06.

On Wednesday, the index rose 0.1% after a 0.85% drop on profit-taking away from a five-week high at 101.98.

US Yields

US 10-year treasury yields fell 0.9% on Thursday away from a five-week high at 4.548%, pressuring the greenback.

Fed Remarks

Chicago Fed President Austin Goolsby said the recent data that showed lower inflation doesnt necessarily reflect the impact of the new US tariffs on imports, and the Fed requires more data to gauge the path ahead clearly.

Fed Deputy Governor Philip Jefferson said that latest inflation data shows progress towards achieving the 2% inflation target.

However, he believes the outlook has become unclear due to the latest tariffs and their potential impact on prices.

According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in June stood at just 8%, and the odds of such a cut in July stood at 40%.

Traders are now pricing in 50 basis points of US interest rate cuts this year, likely starting next September.

Federal Reserve Chair Jerome Powell is scheduled to speak later today in Washington and could provide clues on the banks future monetary policy and thinking.

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