Dollar: Policy Risk Keeps Downside Bias Alive – ING

Lead: The dollar opened the week on a weak footing, with ING analysts Chris Turner, Francesco Pesole, and Frantisek Taborsky noting that the dollar's downside bias persists as markets await clearer policy signals from the White House.

**Lack of Policy Signals Weighs on Dollar**

The ING analyst team believes that the current absence of clear policy guidance from the U.S. government is a core factor pressuring the dollar in the short term. Investors remain highly cautious about policy direction in key areas such as trade, fiscal, and regulatory matters, dampening willingness to buy the dollar. The firm stressed that if this policy vacuum persists, the dollar's downside risks will be difficult to dissipate.

**External Factors Intensify Downward Pressure**

Beyond domestic policy uncertainty, easing geopolitical tensions are also dragging on the dollar. According to market reports, confirmation of a U.S.-Iran ceasefire agreement and the reopening of the Strait of Hormuz have pushed energy prices lower, undermining the dollar's appeal as a safe-haven asset. ING analysts said this shift in the external environment further reinforces the dollar's current downside bias.

**Fed Policy Path Emerges as Potential Wildcard**

Looking ahead, ING analysts warned that if the Federal Reserve opts to hold interest rates steady at upcoming meetings, the dollar could face additional downward pressure. Without support from tightening expectations, the dollar index may struggle to gain meaningful rebound momentum. As of press time, the dollar index was trading near 98.94, with markets closely watching upcoming economic data and official speeches for clues on the Fed's next moves.