The U.S. dollar continues to face downward pressure

The U.S. dollar continues to face downward pressure as uncertainty over President Donald Trump's unpredictable trade policies keeps investors on edge.

The U.S. dollar continued to trade lower on Wednesday, pressured by uncertainty over President Donald Trump’s unpredictable trade policies which kept investors on edge.

The greenback hovered near a five-month low against a major currency on Wednesday, as concerns over the U.S. economy grew ahead of a crucial consumer price index (CPI) report.

The dollar index, which tracks the greenback against a basket of six major currencies, rose slightly by 0.08% to 103.53 by 02:48 ET (06:48 GMT).

However, the currency slid to a five-month low of 103.21 in the last session, with its weakness accelerating after Tuesday’s fall of 0.46%. A move below 103.0 would take the dollar to its lowest point since October 16.

The currency slid after a string of weaker-than-expected economic data fueled concerns over the U.S. growth trajectory.

Small-business confidence declined for the third month in February, adding to the bleak economic picture on Tuesday.

Investor anxiety was also heightened by Trump’s comments during a Fox News interview on Sunday, where he refrained from ruling out a potential recession.

The euro remained largely unchanged at $1.0905, remaining above its 200-day moving average of $1.0890.

The common currency is now trading close to its highest levels since October 11, having touched $1.0947 in the last session.

Optimism over a potential resolution to the Ukraine conflict supported the euro.

On Tuesday, Ukraine signaled its willingness to accept a U.S.-proposed 30-day ceasefire with Russia, which could bring some stability to the geopolitical landscape.

Germany’s pledge to ramp up fiscal spending also supported the euro.

However, political complications within the country’s ruling coalition, with the Greens opposing the spending plan and pushing for rival fiscal proposals, could create volatility in the near term.

The British pound fell slightly, with GBP/USD trading down 0.13% at $1.2931.

Despite the pullback, sterling is supported by improving investor sentiment and a resilient U.K. economy.

Meanwhile, the Japanese yen continued to rise, with the dollar gaining 0.14% to trade at 147.99 yen.

The greenback had tumbled to a five-month low of 146.545 yen in the last session, driven by safe-haven demand for the yen amid global uncertainty.

The Canadian dollar remained largely stable at C$1.4444 after a volatile session on Tuesday.

The loonie initially weakened after Trump announced a sharp increase in steel and aluminum tariffs, doubling them to 50%.

However, the U.S. president later reversed the decision, leading to a recovery in the Canadian currency.

Traders are now looking ahead to the Bank of Canada’s policy announcement later on Wednesday.

Markets anticipate a 25-basis-point interest rate cut as policymakers aim to support economic growth amid ongoing trade turbulence.

Bitcoin prices edged down on Wednesday, continuing to trade in a volatile fashion.

Bitcoin fell 1.4% to $81,661 by 02:34 ET (06:34 GMT), rebounding slightly after falling to a four-month low of $76,666.98 in the last session.

Cryptocurrencies have not been immune to broader risk-off sentiment, with digital assets also experiencing significant swings amid ongoing macroeconomic uncertainties.

Geoffrey Kendrick, global head of digital assets research at Standard Chartered Bank, noted that Bitcoin remains vulnerable to further downside moves, especially if key support at $76,500 is breached.

A drop below this level could trigger a sharp sell-off towards $69,000. However, despite near-term weakness, Kendrick maintained his bullish long-term forecast, projecting Bitcoin to hit a record $200,000 by year-end.

Investors are now awaiting the release of the U.S. consumer price index (CPI) later today, which is expected to be a major market-moving event.

Julien Lafargue, chief market strategist at Barclays Private Bank, highlighted the dilemma facing traders.

“A higher-than-expected reading could fuel the stagflation narrative, while a weaker-than-expected print could cement recession fears. What the market really needs at this point is better visibility on growth rather than on inflation.”

The upcoming Federal Open Market Committee (FOMC) meeting on March 19 will also be crucial in determining the Federal Reserve’s next steps.

Current market pricing suggests a 96% probability that the Fed will keep its interest rate in the 4