Dollar: DXY Softens in Risk-On Mode - ING

The dollar index is currently trading near 98.78, extending its recent weak trend. ING analyst Chris Turner notes that U.S. Treasury buyback operations and declining long-term yields are supporting equities while putting pressure on the dollar, with the market's risk-on mode weighing on the currency.

**Treasury Operations and Falling Yields Pressure the Dollar**

The U.S. Treasury's debt buyback operations help improve market liquidity and push long-term yields lower. This dynamic boosts risk assets such as equities while diminishing the dollar's safe-haven appeal. ING analyst Francesco Pesole stated in a report that the risk balance suggests the dollar could extend its decline, with the currency lacking strong upward momentum in the current environment.

**Risk Appetite Recovery Weakens Safe-Haven Demand**

As market sentiment turns positive, funds are flowing out of safe-haven assets like the dollar and into higher-risk asset classes. According to ING analysis, the dollar index previously found some support below 104.00, aided by a brief stabilization in U.S. asset markets, but this support is fading. If the Federal Reserve maintains rates unchanged, ING warns the dollar could face further downward pressure and may follow oil prices lower.

**Near-Term Outlook Remains Biased to the Downside**

Overall, the dollar index lacks a rebound catalyst amid rising risk appetite. Market reports indicate that investors are adjusting defensive positions on the dollar, with both technical and fundamental factors pointing to continued near-term pressure. However, future movement will still depend on Fed policy signals and changes in global economic data.