DXY Dollar Index weakens along with US Treasury yields and trades around 104.10

• The DXY Dollar Index loses ground due to the low yield of US bonds.
• Fed Chairman Jerome Powell tempered expectations for a rate cut in March.
• Cleveland Fed President Loretta Mester said the US central bank could consider interest rate cuts later in the year.

The index of the Dollar DXYwhich measures the value of the US dollar (USD) against six other major currencies, extends its losses for the second consecutive session. The DXY index remains in negative territory after recovering part of its intraday losses, hovering around 104.10 points during the Asian session.

The president of the Federal Reserve (Fed), Jerome Powell moderates rate cut expectations and underlined the importance of closely monitoring inflation as it approaches the underlying target of 2%. Despite these comments, the Dollar is weakened by the prevailing sentiment in the US bond market, which is affecting its performance despite the Federal Reserve's (Fed) prudent stance on monetary policy. At the time of writing, US 2-year and 10-year bond yields stood at 4.39% and 4.02%, respectively.

On Monday, the US Dollar saw a significant rally in response to strong ISM services sector data for January. He ISM Services Purchasing Managers' Index (PMI) beat expectations and stood at 53.4, surpassing both the consensus figure of 52.0 and the previous month's reading of 50.5. On the other hand, the ISM service sector employment index improved to 50.5, compared to 43.8 the previous month.

Separately, Cleveland Fed President Loretta Mester said Tuesday that the U.S. central bank could consider cutting interest rates later this year. However, she warned against being hasty. Separately, Federal Reserve Bank of Philadelphia President Patrick Harker last week expressed his support for the Fed's decision to keep interest rates unchanged, citing an outlook that indicates continued declines in the rate. inflation.

Adriana D. Kugler and Thomas I. BarkinFed members are scheduled to deliver speeches on Wednesday, which will likely be closely watched for more information on the Fed's stance on monetary policy.