The dollar slid to its lowest level since May after an unexpectedly weak US retail sales reading pushed traders to trim expectations for a 2026 interest‑rate hike. The Bloomberg Dollar Spot Index fell as much as 0.4% on Friday, touching its weakest level since May 29.

Retail sales data revealed that shoppers are curbing their spending habits, a signal that economic momentum is slowing. In response, traders in the bond market pulled back bets that the Federal Reserve will raise borrowing costs this year, eroding a tightening narrative that had buoyprod the currency in recent months.

The dip underscores a shift in market sentiment, with investors reassessing rate expectations amid weaker economic signals.

Market watchers remain cautious as the Fed signals its stance, and the dollar’s trajectory will continue to hinge on forthcoming data releases and policy announcements.