DXY trades near mid-June lows as softer US labor data and geopolitical shifts weigh on the greenback’s rally.
The US Dollar Index (DXY) fell below 100.00 on Monday, extending losses as risk premiums tied to geopolitical tensions ease and domestic economic data softens. Analysts cite a weaker labor market and diminishing expectations for Federal Reserve rate hikes as key drivers of the decline.
Prior to the drop, markets had priced in 11 basis points of tightening for September, 28bp for December, and 40bp for April. ING analysts note that dovish repricing could further pressure the USD if the Fed’s stance shifts. Societe Generale highlights the 200-day moving average at 99.18 as a critical support level for the DXY.
The shift follows disappointing Nonfarm Payrolls data, which has prompted reassessment of the Fed’s policy trajectory. Bond and FX markets are adjusting to the possibility of a less aggressive central bank in the second half of the year.