The dollar index fell below 106 on Friday to its lowest in over three weeks, as the US economy contracted for a second straight quarter, fueling recession fears and raising expectations that the Federal Reserve may need to slow down the pace of interest rate hikes. US GDP shrank 0.9% YoY in the second quarter of 2022 following a 1.6% contraction in the first quarter. The data was released a day after the US central bank raised its policy rate by 75 basis points in a widely expected move, with Fed Chair Jerome Powell saying that it will likely become appropriate to slow the pace of rate increases depending on the flow of data. The dollar retreated further from a 20-year high of 109.3 reached in mid-July and is on track to decline for the second straight week.
