USD weekly forecast

The US Dollar saw fluctuations at the beginning of last week, initially gaining support as a safe-haven currency amidst a cautious market sentiment. USD exchange rates subsequently started to decline following remarks from Federal Reserve Chair Jerome Powell.

Speaking on a panel at the European Central Bank’s Sintra forum, Powell suggested that recent US inflation figures indicate "we are getting back on a disinflationary path."

The selling pressure on USD was further reinforced in the middle of the week following the release of disappointing US data.

A shock decline in ADP employment figures initially caused a drop in the US Dollar, which was then exacerbated by the latest ISM services PMI showing an unexpected contraction in US service sector growth last month.

Wrapping up the week was the release of the latest US non-farm payroll figures, which saw the US Dollar extend its losses as concerns over a slowing US labor market bolstered expectations of Fed rate cuts.

Looking ahead to the week, the US is set to release its latest consumer price index.

June’s CPI figures are expected to show that US inflation continues to moderate, with economists forecasting that price growth will reach its lowest levels since the beginning of 2024.

This development could increase expectations that the Fed will initiate interest rate cuts sooner rather than later, putting significant pressure on USD exchange rates.

The USD sell-off could intensify if Jerome Powell strikes a dovish tone again during his testimony before Congress on Tuesday.

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