US Dollar Index trades lower around 97.00, three-year lows, awaits US PCE inflation

• The US Dollar Index maintains its position near 97.00, the lowest level since March 2022.
• Iranian Foreign Minister Abbas Araghchi declined to resume nuclear talks with the United States.
• President Trump may announce his preferred candidate to lead the Federal Reserve next year.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is remaining subdued for the seventh consecutive day and trading at around 97.30 during the early European hours on Friday, close to the 97.00 level, the lowest level since March 2022, recorded on Thursday. Traders await the US May Personal Consumption Expenditures (PCE) Price Index data later in the North American session.

The Greenback holds ground possibly due to traders adopting caution, driven by the potential weakening market sentiment. Iranian Foreign Minister Abbas Araghchi stated that Tehran has no intention of resuming nuclear negotiations with the United States. “No agreement or arrangement has been made to resume negotiations. Neither any promise has been given, nor any discussion has taken place on this matter,” Araghchi added as per CNN.

Investors also focus on renewed concerns over the US Federal Reserve’s (Fed) independence. At the Hague on the sidelines of the NATO summit on Thursday, US President Donald Trump called the Federal Reserve Chair Jerome Powell “terrible” and shared that he has several potential successors in mind. “I know within three or four people whom I’m going to pick.” Trump could weaken Powell’s authority by announcing his preferred candidate by September or October to lead the central bank next year.

Meanwhile, Chicago Fed President Austan Goolsbee said that political factors and the naming of a so-called shadow chair have no influence on policy decisions. Goolsbee added, “That would have no effect on the FOMC itself.” “Just look at the minutes and transcripts. You can see, word for word, what the rationale is in making the decisions, and they’re not about elections and they’re not about partisan politics,” he said as per CNBC.

The US Dollar faced challenges as the downbeat US Gross Domestic Product (GDP) data further supports dovish expectations surrounding the Federal Reserve’s (Fed) policy outlook. The report showed a 0.5% contraction in the first quarter, which came in worse than the previous estimate and the market expectation of -0.2%. However, the impact of the weaker US GDP was offset by Jobless Claims falling to a five-week low at 236K and Durable Goods Orders posting a 16.4% increase, the biggest gain in 11 years.