The DXY US dollar index fell to a nearly two-month low of 102.50 in early trading on Thursday, after a significant decline in the previous two weeks due to recent bank failures and the prospect of the Federal Reserve suspending interest rate hikes.

The US dollar index, which tracks the US dollar against the six major currencies, has been at a disadvantage since the banking turmoil began in early March, with the collapse of Silicon Valley Bank and Signature Bank.

Amidst the risk aversion sentiment, the failure of the banking industry has led to a comprehensive sell-off on Wall Street and intensified tensions over the strength of the US economy, raising doubts about the outlook for the US dollar.

The US dollar will remain highly sensitive and vulnerable to signs of further cracks in the US banking system and local economy.

The weakness of the US dollar has benefited major peers and commodities, with the euro jumping to a two-month high of $1.0860, the pound rising above $1.23, the Australian dollar breaking through the key resistance level of $0.67, Bitcoin rebounding to nearly $29000, while gold and silver denominated in US dollars have climbed to annual highs of $2000/ounce and $23.50/ounce respectively, and Brent crude oil reaching $78/barrel.

Although the yield of two-year and 10-year US treasury bond rose to more than 4% and 3.50% respectively, the US dollar weakened, which was also the result of the decline in demand for these safe assets and gold and silver bars.

However, after the intervention of US regulatory agencies, concerns about the banking crisis have eased, as they ensured bank deposits and liquidity in the system. First Citizens BancShares, a US regional bank, acquired assets from Silicon Valley Bank last Monday.

Market participants are currently waiting for the release of US GDP and weekly jobless claims later on Thursday, as well as Friday's personal consumption expenditure data, to obtain further new clues about inflation, economic conditions, and policy plans.

On the other hand, some investors believe that easing concerns about the banking crisis will allow the Federal Reserve to continue cutting interest rates until inflation is lowered to the Fed's target of 2%.