U.S. dollar declines as Federal Reserve signals interest rate cuts amid cooling inflation.

The U.S. dollar is declining as the Federal Reserve signals impending interest rate cuts, having dropped 5% from its 2024 highs and nearing a yearly low. This trend arises from cooling inflation, which may enhance U.S. export competitiveness. The dollar's future depends on the depth of rate cuts and global banking responses. Currently, traders anticipate around 100 basis points of cuts this year, marking a shift in speculative positioning towards a net short on the dollar.