Dollar stays under pressure on Fed rate cut expectations, with focus turning to release of key US data

The dollar index remains in negative territory for the fifth consecutive session and again pressures key supports at 97.61/52 (daily cloud base / Fibo 61.8% of 95.97/100.04), which have so far held firm against repeated attempts and continue to mark strong support levels.

The dollar maintains a weak tone as expectations for a September Fed rate cut intensify, reinforced by the latest dovish remarks from two Fed officials. Political uncertainty in the US also weighs, following President Trump’s attempt to dismiss Fed Governor Cook and a court ruling declaring most of Trump’s tariffs illegal.

However, market participants are likely to adopt a more cautious stance ahead of the release of key US labor market data for August, which takes central focus this week as the final signal before the Fed’s September policy meeting.

The US labor market has shown clear signs of softening in recent months, now the Fed’s main concern, especially after Chair Powell reiterated that elevated inflation is seen as a temporary issue. Economists forecast a sharp decline in job openings and private sector hiring (JOLTS / ADP), while expecting non-farm payrolls to remain broadly steady and unemployment to edge higher.

A weaker-than-expected NFP report would provide the final confirmation for a September rate cut and increase the likelihood of further easing later this year. In such a scenario, pressure on the dollar would deepen, with a firm break below the cloud base and Fibo supports exposing the next downside targets at 96.93/82 (Fibo 76.4% / July 24 higher low).

On the other hand, stronger-than-expected August NFP data, though seen as less likely, would offer temporary relief but is unlikely to significantly alter the broader bearish outlook for the dollar.

Res: 97.61; 98.01; 98.15; 98.49
Sup: 97.41; 97.15; 96.93; 96.48