US dollar slumps to three-year low as housing data disappoints
The US dollar has weakened further after new home sales in January dropped to their lowest level in over three years. Losses deepened as the British pound, euro, and Japanese yen all gained ground. Central bank comments on inflation, linked to tensions in Iran, have added to the pressure on the currency.
The dollar index (DXY00) fell by 0.45% on Thursday, extending recent declines. Earlier, the currency had strengthened after Russia's invasion of Ukraine in February 2022, driven by geopolitical uncertainty and tighter US monetary policy. But by March 2026, lower US interest ratesânow at 3.75%âand rising optimism in gold markets have shifted the trend.
US economic data released today showed mixed signals. Weekly jobless claims and the March Philadelphia Fed business survey both pointed to a hawkish stance from the Federal Reserve. Fed Chair Jerome Powell reinforced this on Wednesday, stating that no rate cuts would come without clear progress on inflation. His remarks provided some temporary support for the dollar. Despite the broader weakness, demand for dollar liquidity has risen due to stock market instability. This has helped limit deeper losses for the currency. Meanwhile, gold prices have climbed, with forecasts now reaching as high as $7,031 per ounce.
The dollar remains under strain from strong rival currencies and disappointing US housing figures. While Fed policy and liquidity needs have cushioned some losses, the outlook stays uncertain. Investors are now watching inflation trends and central bank moves for further direction.
