The dollar index opened the U.S. session on a weak note on Friday due to unwinding safe-haven flows and slid further from there after Fed Chair Jerome Powell said rates may not have to rise further owing to tighter credit conditions after the recent bank crisis.
The dollar moved lower still after CNN reported Treasury Secretary Janet Yellen told bank CEOs more mergers may be necessary, along with reports that U.S. debt ceiling negotiations had halted.
EUR/USD rose 0.45%, heading toward a close for the week near 1.0820.
The prospect of steady to lower U.S. rates against the backdrop of continued ECB rate hikes in 2023 supported EUR gains versus the dollar.
USD/JPY fell 0.67% to 137.76 from its 2023 high by 138.75.
The yen reverted to haven status on the back of the Yellen and debt ceiling news, while lower U.S. rate expectations lent a hand.
GBP/USD rose 0.42% to 1.2455, running into resistance ahead of its 30-DMA.
GBP/USD remains sensitive to rate differentials as the BoE is expected to continue hiking into year end.
Money market projections indicate UK rates will overtake U.S. rates in late 2023 and dominate in 2024, which should support GBP/USD near recent levels.
Oil dipped 1% as debt ceiling and bank issues would tighten global financial conditions and reduce global growth, diminishing the demand for crude.
Bitcoin rallied 0.44% to $26.9k, remaining anchored by its 10-DMA at $27k, gold rallied 1.18%, ending NorAm near $1,981.
Banking and rate uncertainties provided boosts for alternative assets.
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