The dollar suffered its weakest weekly performance in more than three months as investors grew uneasy about whether the Federal Reserve will respond aggressively enough to persistent inflation pressures. The move marked a sharp change in tone for a market that had recently been leaning heavily toward further dollar strength.
According to the snippet, Bloomberg’s Dollar Spot Index fell 1.3% over the week. That decline came even as traders had built up bullish positions ahead of the Fed meeting, showing that confidence in the US currency had been strong going into the event.
Data from the Commodity Futures Trading Commission released on Friday showed traders had increased their positive dollar bets by Tuesday to the most upbeat level since 2014. The contrast between that positioning and the dollar’s later slide suggests investors were forced to reassess expectations as doubts grew over the central bank’s willingness or ability to contain inflation decisively.
The week’s losses underline how sensitive the currency market remains to shifts in Fed expectations. When investors see any sign that policymakers may not move forcefully enough, the dollar can quickly lose momentum even after a period of strong bullish sentiment.
