USD weekly forecast

Last week, the US dollar began with struggles against its counterparts after a disappointing ISM manufacturing PMI. The May index, at 48.7, signaled an intensified contraction in US factory activity.

The Dollar staged a recovery on Tuesday amidst a pessimistic market sentiment. However, its upward movement was limited by a larger-than-anticipated decline in job openings for April.

During midweek trading, the US dollar fluctuated amid mixed economic data. Although the ISM services PMI surpassed expectations, indicating an expansion in sector activity, the latest ADP employment report suggested a slowdown in job creation.

The US dollar faced downward pressure on Thursday due to additional indications of slack in the US labor market, marked by an increase in jobless claims. However, the rise in US Treasury yields helped to mitigate steeper losses for the USD.

On Friday, the greenback surged higher on the back of stronger-than-expected nonfarm payrolls. In May, the US economy added 272,000 jobs, well surpassing the forecasted 185,000. This fueled speculation that the Federal Reserve might not implement interest rate cuts as aggressively later in the year, resulting in a boost for the USD.

The Federal Reserve is set to announce its latest interest rate decision on Wednesday. While no policy changes are anticipated, any hawkish forward guidance could propel the US dollar upwards.

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