Forexlive Americas FX news wrap 30 Jun. Month ends with USD at low for year. Yields lower

The USD Index (DXY) closed out June with a steep decline, hitting a new low for the year at 96.77, a level not seen since March 1, 2022. The index fell -2.67% in June, marking a clear shift in sentiment toward the U.S. dollar. All major currencies gained against the greenback this month, with the euro (EUR) and Swiss franc (CHF) posting the largest advances.

The EURUSD rose 3.86%, the biggest monthly gain among the majors. This move came despite the ECB delivering another rate cut, bringing its policy rate to 2.00%. Markets seem to believe the ECB is now prepared to pause after ten consecutive cuts, while the Fed remains stuck at 4.50%, delaying its own easing cycle. Traders increasingly expect the Fed to move earlier than previously anticipated, adding pressure on the dollar.

The USDCHF also posted strong losses, driven by flight-to-safety flows into the Swiss franc amid rising geopolitical tensions. Concerns that the U.S. could be drawn into the ongoing Iran–Israel conflict added to the CHF’s appeal.

Additional weakness in the dollar was fueled by growing political pressure. Donald Trump, in a surprising twist, sent a handwritten note to Fed Chair Powell accusing him of costing the country “millions” by delaying rate cuts, asserting that interest rates should already be at 1%. Trump has also hinted at replacing Powell, potentially as soon as January, raising questions about future monetary policy direction.

The market is now watching closely to see if the Fed bends under the pressure or stays the course. Either way, June’s sell-off in the dollar reflects everything from concerns about US deficits, to the expectation for sharply lower rates ahead, political interference, and mounting global risks.

The snapshot of the changes for the month showed:

• EUR -3,86%
• JPY -0.04%
• GBP -2.1%
• CHF -3.51%
• CAD -0.93%
• AUD -2.32%
• NZD -2.33%

In the US debt market in June yields have moved lower. A look at the yield changes along the interest rate curve:

• 2 year yield -17.7 basis points at 3.72%.
• 5 year yield, -17.5 basis points at 3.799%.
• 10 year yield, -16.6 basis points at 4.232%
• 30 year yield -14.7 basis points at 4.77%

In the US stock market for June, the major indices closed at record levels (for the second day in a row) to end the trading month. Gains were led by the NASDAQ index :

• The Nasdaq index closed the month with a solid gain of 6.57% after rising by 9.56% in May.
• The S&P index rose line 4.96% after rising by 6.1% in May.
• The Dow Industrial Average rose by 4.32% after a gain of 3.94% in May