USD Index Retreats 2.3% as Risk-Off Sentiment Fades and Rate-Cut Bets Intensify

Gate News message, April 22 — The U.S. dollar index has fallen approximately 2.3% from its March peak, marking its worst monthly performance since August 2025, as easing Middle East tensions reduce safe-haven demand and expectations for Federal Reserve rate cuts intensify.

Major financial institutions attribute the dollar’s weakness to a dual shift: diminishing risk premium and changing policy outlook. JPMorgan has reactivated its dollar short strategy and turned bullish on risk currencies like the Australian dollar, while Bank of New York Mellon noted that emerging market currencies are broadly rallying, reflecting a significant pickup in global risk appetite. The euro, South Korean won, and South African rand have rebounded sharply, with some gains exceeding 2%.

Longer term, institutions point to rising U.S. policy uncertainty and a global trend of reducing dollar-denominated assets as potential headwinds for the currency. Major investment banks forecast the euro could strengthen to 1.20 against the dollar within the next year, suggesting the dollar’s weakness may persist.