The US Dollar Index (DXY) continues its downward trend for the third consecutive day, dropping below the 101.00 mark to reach a one-week low on Friday. This decline is fueled by expectations of a larger Fed rate cut, which is keeping US bond yields low and putting pressure on the Greenback.
Investors are now eagerly anticipating the release of the Nonfarm Payrolls (NFP) report, which will provide crucial insights into the state of the US labor market. Recent data, including a drop in job openings and weak private-sector employment growth, have reinforced expectations of further interest rate cuts by the Fed.
Chicago Fed President Austan Goolsbee’s comments supporting easing interest rates have also contributed to the downward pressure on the US Dollar. As a result, the DXY is on track to record its third week of losses in the past four weeks, with bearish sentiment prevailing in the market.
While a positive US jobs report could trigger a short-covering rally for the Greenback, the overall outlook remains bearish. The path of least resistance for the US Dollar Index seems to be to the downside, with limited upside potential in the near term.
Analysis:
The US Dollar Index is facing downward pressure as investors anticipate a larger Fed rate cut and await the NFP report for further guidance. Weak economic data and dovish comments from Fed officials have weighed on the Greenback, pushing it to a one-week low. While a positive jobs report could lead to a temporary rebound, the overall trend suggests continued weakness in the US Dollar.