U.S. Dollar Drops Amid Fed Rate Cut Prospects

The U.S. dollar weakened against its major counterparts in the New York session on Friday, as treasury yields fell amid expectations of rate cuts by the Federal Reserve.

Recent economic data indicated a slowdown in inflation and re-affirmed bets for a 25-bps rate cut by the Fed in September.

Market participants await Fed Chair Jerome Powell's speech at the Jackson Hole symposium next week.

Dovish comments from Chicago Fed President Goolsbee also weighed on the currency.

Goolsbee said that the central bank need not tighten longer than necessary as there is no overheating in economy.

The greenback declined to 1.1006 against the euro, 0.8663 against the franc and 147.61 against the yen, off its early highs of 1.0968, 0.8727 and 149.34, respectively. The currency is poised to challenge support around 1.12 against the euro, 0.855 against the franc and 142.00 against the yen.

The greenback touched more than a 3-week low of 1.2927 against the pound. The currency is likely to locate support around the 1.31 level.

The greenback reached as low as 1.3694 against the loonie. If the currency falls further, it is likely to test support around the 1.33 region.

The greenback dropped to more than a 3-week low of 0.6660 against the aussie and a 2-day low of 0.6042 against the kiwi, from its early highs of 0.6607 and 0.5978, respectively. The currency is seen finding support around 0.68 against the aussie and 0.63 against the kiwi.