New York

THE US dollar stumbled on Friday, capping its worst weekly performance against the euro in more than two years, pulled lower by expectations US interest rates will rise more slowly than previously expected. The greenback also ended the week on a sour note against other currencies, with its largest weekly decline in two months against the Swiss franc and yen, two days after the Federal Reserve downgraded its forecasts for growth, inflation and interest rates. That doused investor expectations of a June tightening.

Jens Nordvig, Nomura's head of global foreign exchange, said one major reason for the sharp reduction in the Fed's rate forecasts was the strengthening of the US dollar since the US central bank's policy meeting in December. "This shows the Fed is highly sensitive to large moves in the dollar and that further dollar strength has the potential to further delay any tightening," added Mr Nordvig.