The US dollar started September in a significantly weaker position against most global currencies, despite Wall Street remaining closed today due to the Labor Day holiday. In the morning, we observed increased volatility in dollar-related pairs, particularly in EURUSD, which is currently at its highest level in a month and is up 0.35%.
The European currency is supported by positive macroeconomic data from Europe and expectations of limited interest rate cuts by the ECB. The weakness of the dollar stems from growing expectations of faster interest rate cuts by the Fed in the face of deteriorating labor market data and Powell's dovish speech in Jackson Hole. The market is currently pricing in an 88-90% chance of a 0.25 bps cut at the next FOMC meeting. In addition, regulatory uncertainty related to court rulings on Trump's tariffs, as well as disputes over the Fed's independence, are putting additional pressure on the dollar.
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The US dollar is currently one of the worst performing currencies in the world right now. Source: xStation
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