DXY drops to mid-June lows after softer core PCE and weaker Q2 GDP data fuel dovish Fed repricing.
The US Dollar Index fell below 100.0 for the first time since June 17, extending losses after the Federal Reserve’s policy meeting. Markets priced in a more dovish Fed stance following a 0.1% month-on-month rise in June core PCE and a 1.5% annualized Q2 GDP print, both below expectations.
The decline mirrored levels seen after former Fed official Kevin Warsh’s June press conference, which had previously lifted the greenback. Stretched net-long USD positioning against G9 currencies and large EUR/USD shorts amplified the move, with JPY intervention adding further pressure.
USD/JPY dropped over 3%, spilling over into broader dollar sentiment. Analysts warn additional long-squeezing could prolong the selloff, with no clear bottom in sight.