Washington: The US dollar maintained a strong position at the 100 threshold during the first half of the year amid Washington's tariff measures and Middle East tensions. The US Dollar Index, which measures the value of the greenback against the euro and other foreign currencies, experienced a reversal as geopolitical risks in the Middle East and regional tensions reinforced the dollar's safe-haven feature, contributing to its performance against other currencies.

According to Anadolu Agency, the US dollar fell 1.5% to 99.7 as expectations that the Fed would not take sufficiently strong actions in combating inflation came to the fore, marking its first monthly decline in two months. This decline saw the currency fall below the 100 threshold for the first time since June 17, following a growth of 0.8% in May and 2.3% in June, after a fall of 1.6% in April. The potential for a downward move was limited as Fed rate cut expectations waned.

Jane Foley, a senior foreign exchange strategist at Rabobank, told Anadolu that the Fed's commitment to fighting inflation under chair Kevin Warsh came into question following the recent meeting. Foley noted a shift in expectations over the Fed's monetary policy, with a general consensus pointing to further rate hikes over a six-month horizon. This shift contrasts with the consensus view earlier in the year, which anticipated the risk of Fed rate cuts.

Piotr Matys, a senior foreign exchange analyst at In Touch Capital Markets, explained that Warsh's reluctance to commit to rate hikes in advance, along with his remarks at the press conference, left many confused and undermined the bank's credibility, driving down the US dollar's value. Matys suggested that Warsh could mitigate this risk by supporting a rate hike in September, emphasizing that central bank credibility is a crucial pillar of support for any currency, especially a major reserve currency like the dollar.