The U.S. dollar maintained its position above recent lows against the euro and yen during Monday’s trading session because the weak jobs report from last week strengthened expectations about Federal Reserve rate cuts. The market waits for ISM services data which should indicate a slight improvement to support the dollar.
The Federal Reserve will initiate rate cuts starting in September according to Goldman Sachs analysts who predict three consecutive quarter-point reductions but maintain flexibility for a 50-basis-point reduction if unemployment continues to rise. The European Central Bank has finished its easing cycle according to analyst predictions.
The euro value decreased by 0.25% to reach $1.1544 while the dollar index increased 0.30% to 98.864. Sterling prices rose 0.05% to $1.3291 before the Bank of England makes its policy announcement. The yen depreciated 0.34% to 147.6 per dollar following Bank of Japan minutes which indicated potential future interest rate increases when trade tensions decrease.
Market participants now predict a 92% probability of a September Federal Reserve rate cut which represents a significant increase from the previous 63% prediction and forecast 130 basis points of easing by October 2026. The Swiss franc declined for a second consecutive day when it lost 0.25% of its value to reach 0.8103 because Switzerland works to prevent severe U.S. tariffs that endanger its export business.
