The dollar index (DXY00) on Friday fell by -0.36%. The dollar retreated after Friday after talks to raise the debt ceiling hit a roadblock when Republican negotiators left a meeting with White House representatives and said talks were on a “pause.” The dollar also moved lower Friday after Fed Chair Powell said the Fed may not have to raise interest rates as high as earlier expected due to tightening credit conditions.
Friday’s comments from Fed Chair Powell were dovish and bearish for the dollar. Fed Chair Powell said, "While the financial stability tools helped to calm conditions in the banking sector, developments there on the other hand are contributing to tighter credit conditions and are likely to weigh on economic growth, hiring, and inflation. As a result, interest rates may not need to rise as much as they would have otherwise to achieve our goals." Powell also signaled he is inclined to pause rate increases at the June FOMC meeting when he said, "Policymakers can afford to look at the data and the evolving outlook to make careful assessments."
