The U.S. dollar weakened against most major currencies at the close of last week, marking a pause in its recent advance across global foreign exchange markets. The pullback came despite renewed assurances from U.S. officials that Washington remains committed to a strong-dollar policy.
U.S. Treasury Secretary Scott Bessent said President Donald Trump continues to support a firm dollar, arguing that recent policy measures are designed to enhance the appeal of dollar-denominated assets for global investors, even as the dollar index has softened.
Market participants viewed the latest move as a technical correction rather than a shift in trend. Analysts at Bannockburn Capital Markets said the dollar’s retreat followed gains against G10 currencies and coincided with the U.S. Dollar Index stalling near a key technical level. The index ended last week close to the 61.8% Fibonacci retracement of the sharp sell-off recorded in January, a move some analysts believe was driven by perceptions that U.S. policymakers were comfortable with a weaker currency.
Technical indicators continue to suggest that upward momentum has not yet been exhausted. According to an analysis from Marc to Market, momentum readings remain positive and are not overstretched. Chart signals indicate that a sustained break above the 98.00 level on the Dollar Index could open the door to further gains toward 98.60, with the mid-January peak near 99.50 serving as a longer-term reference point.
In spot trading, the greenback slipped to 0.7751 against the Swiss franc and weakened to 1.3623 versus the British pound, reversing earlier gains that saw it trade as high as 0.7786 against the franc and reach a two-week high of 1.3508 against sterling. The dollar also retreated against the euro, falling to a two-day low of 1.1826 after earlier touching a two-week high near 1.1765.
Analysts identified potential support levels at approximately 0.73 against the franc, 1.43 versus the pound, and around 1.22 against the euro, suggesting that further declines may encounter buying interest near those thresholds.
The dollar also extended its weakness against the offshore Chinese yuan, touching a fresh low slightly below CNH6.93 during the middle of last week. FX traders reported that the greenback hovered close to that level heading into the weekend, with technical attention now shifting toward the CNH6.87 area as the next notable support zone.
Broader market sentiment was influenced by political and monetary policy developments. The nomination of Kevin Warsh as a potential successor to Federal Reserve Chair Jerome Powell appeared to trigger corrective moves across several asset classes, including currencies. At the same time, a series of softer-than-expected U.S. labour market indicators has strengthened expectations that the Federal Reserve could deliver at least two interest rate cuts this year.
While the dollar traded mostly lower into the weekend, analysts cautioned against interpreting the move as a definitive trend reversal. Bannockburn Capital noted that technical momentum still points to the possibility of further upside correction, even as near-term trading remains volatile.
