US Dollar Index Drops to 97.00 on Fed Cut Bets, Weak Data

US Dollar Index Falls to Near 97.00, Hits Lowest Level Since March 2022

USD Weakens Sharply Ahead of Key US Jobs Data

The US Dollar Index (DXY) extended its downward trend into Monday’s European session, dropping to 96.98, a level not seen since March 2022. The decline is largely attributed to increased expectations of Federal Reserve rate cuts in September, as market participants digest soft US macroeconomic data.

Economic Data Undermines USD Sentiment

On Friday, the US Personal Spending report surprised to the downside for a second consecutive month, while Personal Income shrank by 0.4% in May, marking the steepest decline since September 2021. This further cemented market confidence in a Fed policy pivot, weakening the greenback.

All Eyes on Nonfarm Payrolls and Unemployment Rate

Investors are now focused on the upcoming Nonfarm Payrolls (NFP) release, due later this week. The consensus expects a gain of 110,000 jobs in June, down from 135,000 in May, with forecasts ranging between 75,000 to 140,000. Unemployment is projected to tick higher to 4.3% from 4.2%, potentially providing the Fed with more room to ease monetary policy.

Trump’s Fiscal Push Sparks Additional Speculation

Adding to the market chatter, former President Donald Trump shared an optimistic message on Truth Social, declaring that "one great big beautiful bill is moving along nicely." While short on specifics, the post has sparked renewed speculation about potential fiscal stimulus, which could impact monetary expectations.