By Kevin Buckland
In the world of finance, all eyes are on the U.S. dollar as it remains near a multi-week low against major peers following a soft jobs report. Traders are eagerly awaiting Federal Reserve Chair Jerome Powell's testimony for insights into the future path of interest rates.
Despite Monday's sharp swings, the euro has managed to hold its ground amidst a hung parliament in France, signaling potential political gridlock but alleviating fiscal concerns from extreme political victories.
The U.S. Dollar Index, which measures the currency against key rivals, is currently flat at 104.99, lingering near a 3 1/2-week low of 104.80. The index suffered a 0.9% decline last week, fueled by expectations of rate cuts following the disappointing payrolls report.
With a 76% probability of a rate cut at the September meeting and another cut by December, traders are bracing for potential policy changes. Chair Powell's testimony, along with Thursday's consumer price data, will be closely monitored for further clues.
Market experts anticipate a decline in the U.S. dollar over the long term, with a focus on Powell's assessment of inflation risks and labor market conditions.
Despite the political uncertainty in France, the euro remains resilient, hovering around $1.0827. Sterling and the yen are also holding steady against the dollar, showcasing a sense of stability in the currency market.
Overall, the financial landscape is poised for potential shifts based on central bank policies and economic data releases. Investors and traders should remain vigilant and prepared for market fluctuations in the coming days.