The U.S. dollar fell Monday ahead of the release of minutes from the Federal Reserve’s July policy meeting and Chair Jerome Powell’s upcoming speech at Jackson Hole later this week.
At 05:40 ET (09:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.3% lower to 101.977, falling close to seven-month lows.
Bearish dollar momentum starting to build
The minutes, due on Wednesday, and Powell’s speech on Friday are likely to be the main drivers of currency movement for the week, and traders expect a dovish tone to emerge.
“The signs are subtle, but bearish dollar momentum is starting to build,” said analysts at ING, in a note. “The DXY dollar index is now dropping through the lows seen in early August. Events this week such as the July FOMC minutes, payroll revisions, and Federal Reserve speakers could add to the dollar’s losses. Investors may want to see how much lower they can drag the dollar into September.”
The Fed has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range since last July, after hiking its policy rate by 525 basis points since 2022.
Traders have fully priced in a 25-basis-point rate cut from the Fed in September, with a 24.5% chance of a 50 bp move.
Sterling rises to one-month high
In Europe, GBP/USD traded 0.2% higher at 1.2963, climbing to a one-month high as sterling benefits from dollar weakness.
“GBP/USD looks set for a retest of the year’s high at 1.3045 as broad dollar weakness dominates global FX markets,” said analysts at ING. “We had thought that the Bank of England’s dovishness could keep sterling gains in check. On that, BoE Governor Andrew Bailey speaks at the Fed’s Jackson Hole symposium this Friday.”