2024.03.0516:22:00UTC+00U.S. Dollar Drops After Weak ISM Services Data

The U.S. dollar depreciated against its major counterparts in the New York session on Tuesday, as weaker-than-expected ISM services PMI for February increased chances of a rate cut in June.

The ISM said its services PMI fell to 52.6 in February after climbing to 53.4 in January. While a reading above 50 still indicates growth, economists had expected the index to show a more modest decrease to 53.0.

The Commerce Department also released a report showing a steep drop in new orders for U.S. manufactured goods in the month of January.

Investors looked ahead to key economic data and Federal Reserve Chair Jerome Powell's semiannual testimony for more clues on interest rate outlook.

Powell will testify before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.

The U.S. Labour Department's employment report is due on Friday, with employment expected to increase by 200,000 jobs in February after an increase of 353,000 jobs in January.

The greenback fell to near a 2-week low of 1.0876 against the euro, near 5-week low of 1.2734 against the pound and a 5-day low of 149.70 against the yen, off its previous highs of 1.0840, 1.2671 and 150.54, respectively. The greenback is seen finding support around 1.10 against the euro, 1.31 against the pound and 146.00 against the yen.

The greenback edged down to 0.6520 against the aussie and 0.6110 against the kiwi, from its early nearly 3-week highs of 0.6477 and 0.6071, respectively. The currency may locate support around 0.69 against the aussie and 0.64 against the kiwi.

The greenback touched 1.3555 against loonie, down from an early 6-day high of 1.3605. If the greenback falls further, it is likely to test support around the 1.30 region.

The greenback weakened to 0.8825 against the franc, reversing from an early 4-day high of 0.8866. The greenback is poised to challenge support around the 0.84 level.