USD Weakens Across Majors as Fed Maintains Rate Cut Projections

The US dollar retreated broadly against major currencies during the week ending March 20, with the Dollar Index declining despite heightened geopolitical risks from Middle East conflict escalation and rising energy price concerns. The Federal Reserve's decision to maintain its rate cut projection was the dominant driver, signaling that policymakers remain on track to ease monetary policy despite persistent inflation worries. This dovish stance pressured the greenback against the EUR/USD, GBP/USD, and USD/JPY pairs, as traders repriced rate expectations. Notably, the dollar's weakness came even as Middle East tensions typically boost safe-haven demand for the currency, suggesting that monetary policy expectations are currently overriding geopolitical risk premiums. Rising energy prices from the conflict could weigh on oil-importing economies and support commodity currencies like CAD. Traders should watch for upcoming US inflation and employment data that could alter the Fed's rate path. Key resistance for the Dollar Index lies at prior weekly highs, while further dovish Fed rhetoric could accelerate dollar losses across major pairs.