Opinion: Fed's cautious approach to rate cuts doesn't necessarily strengthen the dollar

If the Federal Reserve is cautious about the possibility of interest rate cuts in the coming months at its meeting on Wednesday, the dollar will not necessarily appreciate, Mitsubishi UFJ analyst Halpenny said in a note, according to Gold Ten Data. The euro has strengthened since the beginning of April, although the yield spread between the European Union and U.S. two-year Treasury bonds has moved in favor of the U.S., he said. That means cautious signals about interest rate cuts will not necessarily boost the dollar. Policy uncertainty and strong expectations that the U.S. economy will weaken mean the dollar is likely to remain weak or weaken further, Halpenny said.