Dollar falls for third day on Jerome Powell's remarks

US dollar fell on the European market on Friday against a basket of global currencies, continuing losses for the third day in a row, the first weekly loss in the past three weeks, under pressure from Federal Reserve Chairman Jerome Powell testimony before the US Congress, in which he hinted a near US interest rate cut at the end of this month, which also opens the way for another cut before the end of this year.

The dollar index fell 0.2% to 96.89 points, from the opening level of today at 97.08 points, and the highest level at 97.12 points.

Yesterday, the index lost about 0.05%, its second consecutive daily loss, and reduced a loss by 0.3% after better-than-expected data on key US inflation levels in June.

The data reduced the likelihood that the Federal Reserve will cut about 50 basis points in US interest rates at the next meeting by the end of this month, and a 25 basis point cut has been agreed upon in most of the world's financial markets.

Over the course of the week, the dollar index fell 0.35%, the first weekly loss in the last three weeks, under pressure from Federal Reserve Chairman Jerome Powell's remarks as part of his semi-annual monetary policy testimony before the US Congress.

Jerome Powell told the House Financial Services Committee on Wednesday "The weakness of the global economy, is casting a shadow on the outlook of the US economy in addition to the state of uncertainty about the repercussions of the trade wars that the country is waging with China and other countries".

Powell said that the US central bank will act as needed to maintain expansion and economic gains and that the mounting risks is weighing on the economic forecasts.

In most of the comments, Jerome Powell appeared pessimistic, in contrast to most of the financial market expectations for neutral or less pessimistic comments, which increased markets' prospects up to nearly 30% that the Federal Reserve will cut interest rates by 25 basis points at the next FOMC meeting later this month, after these prospects fell due to the release of strong US jobs data on Friday.

The comments also opened the way for the Federal Reserve to cut the interest rates further before the end of this year, but this depends on how the US economy is performing in the third quarter of this year, after a certain decline in the second quarter.

Later in the day, investors are looking for an important data release by the US on producer prices in June as producer prices are a leading indicator of consumer prices, the main gauge of US inflation.

The Producer Price Index (PPI) is expected to rise by 0.1% in June the same as the previous reading, with the exception of the core reading for the same index (excluding food and fuel products) is expected to rise by 0.2%.