Dollar Dips as US Faces Economic Crossroads Amid Fed Speculations

The dollar hit a five-week low as investors brace for U.S. labor market data potentially influencing Federal Reserve decisions. With the Fed projected to cut rates, political tensions, inflation concerns, and global trade negotiations weigh heavily on the currency's performance. Eyes turn to key economic indicators due this week.

The dollar slipped to a five-week low on Monday as investors anticipated upcoming U.S. labor market data that could affect the Federal Reserve's monetary policy. The currency faces pressure amidst political tensions, court rulings, and ongoing trade negotiations.

Market analysts predict a 90% chance of a 25-basis-point rate cut by the Federal Reserve, with significant expectations by early 2026. As a result, the dollar dipped 0.22% against other major currencies, recording its lowest level since late July and a monthly decline of 2.2%.

Traders are closely monitoring this week's U.S. nonfarm payrolls report, seeking insights into a potentially softening economy. Concurrently, the euro and sterling have gained traction, while the yuan remains supported by robust central bank actions amidst China's economic challenges.

(With inputs from agencies.)