US Dollar Struggles Near Two-Month Low Ahead of Inflation Data

Financial markets started the week with the US dollar hovering close to its lowest point in two months, under pressure from recent economic reports that diminished expectations of near-term monetary tightening by the Federal Reserve. According to Business Recorder, investor focus has shifted sharply toward upcoming US inflation data, which is expected to offer crucial guidance on the future trajectory of interest rates.

The downturn in greenback sentiment stems largely from last Friday's unexpected labor market statistics. Data revealed that the American economy lost jobs in July, while employment growth figures for the preceding two months underwent substantial downward revisions. The weak performance weakened bets on a Federal Reserve rate increase next month, prompting a rally in bond markets that pulled the 10-year US Treasury yield down to 4.637%.

Consequently, the dollar index—which measures the greenback's strength against a basket of six principal currencies—stood virtually flat at 99.6. This places the index near its lowest evaluation recorded since early June, as futures markets noticeably scaled back probabilities of a rate hike in September.

Major foreign currencies capitalized on the dollar's vulnerability. The euro traded slightly higher at $1.1558, lingering near its peak levels last seen in mid-June. Meanwhile, the British pound maintained a stable stance at $1.3490, remaining close to a five-week high.

In Asia, the Japanese yen held steady at 157.90 per dollar. Although the currency surrendered a portion of its recent gains driven by official market interventions, it remained significantly stronger than the multi-decade trough of approximately 164 per dollar recorded late last month. Traders continue to monitor key economic releases across global hubs as sentiment remains tied to central bank policy expectations.