The dollar fell against the euro on Thursday as investors bet the Federal Reserve would cut interest rates again.

The euro climbed to $1.5505 in afternoon trading in New York from $1.5454 late Wednesday.

The British pound rose to $2.0052 from $2.0032, while the dollar rose to ¥105.17 from ¥104.61.

A report showed manufacturing activity unexpectedly shrank in April, adding to concerns about the strength of the U.S. economy.

Lower interest rates can weaken a currency because they give investors a lower return on investments denominated in that currency.

Expectations of further rate cuts have been weighing on the dollar for months.

The Fed has already lowered its key rate six times since September. The overnight lending rate now stands at 2 percent.

In other trading, the dollar rose to 1.0057 Swiss francs from 1.0033 Swiss francs, and to 1.4542 Canadian dollars from 1.4486 Canadian dollars.

The dollar experienced a decline against the euro on Friday, fueled by increasing speculation that the Federal Reserve will implement an interest rate cut in the near future. Market participants are closely watching economic indicators and statements from Fed officials for clues regarding the timing and magnitude of potential rate adjustments.

Impact of Economic Data

Recent economic data releases have painted a mixed picture of the U.S. economy, with some indicators suggesting a slowdown in growth. This has heightened concerns about a potential recession and further fueled expectations for monetary easing by the Fed.

Euro Strengthens

The euro has benefited from the dollar’s weakness, gaining ground against the U.S. currency. The European Central Bank’s (ECB) monetary policy stance, which is currently less dovish than the Fed’s, has also contributed to the euro’s strength.

Factors influencing Currency Exchange Rates:

• Interest Rate Differentials
• Economic Growth Prospects
• Geopolitical Events
• Market Sentiment

Future Outlook

The dollar’s trajectory will likely depend on the Fed’s future policy decisions and the overall health of the U.S. economy. Investors will be closely monitoring upcoming economic data releases and statements from Fed officials for further insights.