Forex Today: US Dollar struggles to rebound as NFP data revive September rate cut bets

Here is what you need to know on Monday, August 4:

The US Dollar (USD) finds it difficult to gather strength against its rivals at the beginning of the week as market expectations for a 25 basis points (bps) Federal Reserve (Fed) rate cut gains traction after dismal employment data. The US economic calendar will feature mid-tier data releases on Monday.

The US Bureau of Labor Statistics (BLS) reported on Friday that Nonfarm Payrolls (NFP) rose by 73,000 in July, missing the market expectation of 110,000. Additionally, the BSL announced that it revised down May and June NFP increases by 125,000 and 133,000, respectively. "With these revisions, employment in May and June combined is 258,000 lower than previously reported," the press release read.

With the immediate reaction, the probability of a 25 bps Fed rate cut in September jumped above 70% from about 30% before the data, as per CME FedWatch Tool. In turn, the USD Index lost nearly 1.5% on a daily basis and erased a large portion of its weekly gains. Early Monday, the USD Index stays in a consolidation phase below 99.00. Later in the day, June Factory Orders data and second-quarter Loan Officer Survey will be watched closely by market participants.

Meanwhile, US President Donald Trump criticized the Fed's policy decisions and called upon Chairman Jerome Powell to lower interest rates after weak jobs data. Trump also announced that he fired BLS Chief Erika McEntarfer, accusing her of manipulating the numbers for political purposes. In the European session on Monday, US stock index futures rise about 0.4%, while the 10-year US Treasury bond yields rise nearly 1% on the day near 4.25% after losing 3.8% on Friday.

EUR/USD benefited from the renewed USD weakness on Friday and rose 1.5% on the day. Nevertheless, the pair ended the week in negative territory. In the European morning on Monday, EUR/USD trades in a tight channel above 1.1550. Sentix Investor Confidence data for August will be featured in the European economic calendar.

GBP/USD rose more than 0.5% on Friday but still registered large losses for the week. The pair holds steady early Monday and moves sideways below 1.3300.

USD/JPY fell 2.2% on Friday and registered its one of the biggest one-day losses of this year. The pair corrects higher on Monday and recovers toward 148.00.

The sharp decline seen in US T-bond yields triggered a decisive rally in Gold on Friday. XAU/USD struggles to preserve its bullish momentum early Friday but manages to hold above $3,350.