Markets overview. US Dollar: 3 Reasons for the Greenback to Stay Pressured This Week – ForexNews.PRO
The dollar is expected to remain weak this week after Friday’s disappointing US jobs data. Contributing to this pressure is the dismissal of the Bureau of Labor Statistics chief following accusations from President Trump of political manipulation of jobs data. The unexpected resignation of Fed Governor Adriana Kugler, potentially influencing the selection of Powell’s successor, further complicates the situation.
The weak jobs report significantly impacted the dollar’s recent gains, with investors now pricing in an 80% chance of a 25 basis point rate cut by the Federal Reserve in September. Kugler’s resignation, effective August 8th, allows President Trump to nominate a replacement who may favor a more dovish monetary policy – a move that could eventually pave the way for a successor to Chair Jerome Powell.
A new, potentially dovish, Fed member could challenge the current stance of unchanged interest rates, increasing internal pressure on Powell. Market participants will be closely watching upcoming comments from FOMC voters Susan Collins, Lisa Cook, and Alberto Musalem for their assessment of the recent jobs report.
Adding to the dollar’s challenges, the President’s firing of the BLS head raises concerns about the reliability of US economic data. Such uncertainty could increase risk premiums for both the dollar and US Treasuries. This week’s $125 billion in Treasury note auctions will be closely monitored.
Trump intends to announce replacements for both positions this week. The ISM services data release on Tuesday will be a key focus, particularly the prices paid and employment components, as concerns about persistent inflation continue to influence expectations for a September rate cut. Fed speakers and the Jackson Hole Fed symposium in late August will be crucial in shaping market sentiment.
The dollar likely peaked last week, and any rallies in the US Dollar Index (DXY) are expected to encounter resistance around the 99.20/50 area before declining towards 97.00.
The euro benefited from the weakened dollar, with EUR/USD experiencing a significant rally driven by expectations of a Fed rate cut. Investors anticipate the European Central Bank catching up with easing measures. The eurozone calendar includes the August Sentix investor confidence reading and June retail sales data.
The euro’s upward trajectory is expected to continue, with potential buying interest around 1.1500/1520 and a target of 1.1700 in the coming weeks.
Switzerland is facing economic challenges due to new US tariffs, which will likely exacerbate disinflationary pressures. EUR/CHF is experiencing a slight correction, but a sustained rally is unlikely until the ECB concludes its easing cycle.
The Bank of England’s upcoming MPC meeting is unlikely to significantly alter the pace of monetary policy easing, keeping EUR/GBP range-bound. A potential reduction in quantitative tightening could positively impact sterling and UK sovereign risk.
