Dollar Sinks to Three-Month Lows as Fed Rate Cut Bets Rise

The US dollar fell to three-month lows on Monday against a basket of major currencies, extending its weekly decline. The dollar index dropped to 104.20, down 0.3% from last week's close, making it its worst weekly performance since early March.

The decline was largely due to growing expectations that the Federal Reserve may begin cutting interest rates sooner than previously anticipated. Investors now see a 70% chance of a rate cut by September, up from 50% just a month ago.

The Japanese yen, which had hit a 34-year low last week, steadied after suspected intervention by Tokyo authorities. The yen traded at 156.2 per dollar on Monday, recovering some ground but remaining under pressure.