The U.S. Dollar continues to be under significant pressure as investors appear to have decided that the recent weakness in the U.S. economy may not be as “transient” as the Federal Reserve Bank would have hoped. Yesterday’s release of April retail sales figures was unexpectedly dismal, and for an economy like the U.S. which is reliant on the consumer for the majority of its growth, it suggested that the slowdown was perhaps not an irregularity. Given that, many believe that the Federal Reserve will have little choice but to maintain an ultra loose monetary policy for a longer period of time and hold interest rates at existing lows.

Yesterday, the EUR/USD was trading at $1.1417, a gain of 0.59% and retreating slightly from a session peak of $1.1435. The GBP/USD was trading at 1.5783, rising 0.28% and off the session high of 1.5810 which had established a fresh 6-month high. The U.S. Dollar Index dropped to 93.175 .DXY, a loss of 0.6%.

Some Central Banks Could Reconsider Policy

The Dollar’s weakness relative to other major currencies is likely to be a factor as central banks around the world reassess their own policy in the event the Dollar’s value continues to fade. Analysts believe economies with stronger currencies, like Australia, may find their central bank inclined to intentionally weaken its own currency if Dollar softness persists as it could potentially have a negative impact on trade.