The upcoming week will bring a fresh test for major currency pairs as investors return from the US Independence Day holiday and continue to digest weaker US labor market data.

The US Dollar underperforms its major currency peers as traders reconsider hawkish Federal Reserve (Fed) interest rate expectations, following the release of the weak United States (US) Nonfarm Payrolls (NFP) data for June on Thursday.

MUFG’s Derek Halpenny argues that softer US labour data should push markets to reprice Federal Reserve policy, shifting from rate hikes toward a greater risk of cuts. He highlights weaker nonfarm payroll trends, deteriorating sentiment indicators and receding inflation risks.

ING’s Francesco Pesole notes that softer US jobs data has weakened the Dollar but does not expect this alone to extend USD losses. He argues the report curbs hopes for two Federal Reserve hikes but is not weak enough for a major dovish repricing.

The Dow Jones futures gain 0.24% to trade above 53,300, while S&P 500 futures rise 0.46%, trading near 7,560. Meanwhile, Nasdaq 100 futures advance 1.0% to trade near 29,850 during European trading hours on Friday.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, is marginally down to near 100.80 during the Asian trading session on Friday.

The US Dollar Index (DXY) trades under pressure on Thursday as weaker-than-expected US Nonfarm Payrolls (NFP) data dent expectations of a near-term Federal Reserve (Fed) rate hike.

A June jobs report that undershot expectations by nearly half sent the Dow Jones Industrial Average (DJIA) to a fresh intraday record on Thursday, which reads like a contradiction until you look at what actually moved.

MUFG’s Michael Wan notes the US Dollar strengthened as lower Eurozone CPI, comments from Kevin Warsh, and anticipation of US Non-Farm Payrolls supported the currency.

The US Dollar (USD) underperforms its major currency peers ahead of the United States (US) Nonfarm Payrolls (NFP) data for June, which will be published at 12:30 GMT.

ING’s Chris Turner notes that the Dollar sell-off after Kevin Warsh’s Sintra appearance has already been retraced, with markets concluding the new Fed Chair is comfortable letting data drive expectations.

Commerzbank’s Volkmar Baur notes that the US Nonfarm Payrolls release is unlikely to have the market impact it once did, even as recent JOLTS data point to improving hiring and fewer layoffs.

MUFG’s Lee Hardman notes Fed Chair Warsh struck a less hawkish tone, with inflation expectations and risks having come down, and policy assumptions now based on no further Fed hikes.

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 101.20 in the early European trading hours on Thursday.

The US Dollar (USD) reflects a subdued performance in the countdown to the United States (US) Nonfarm Payrolls (NFP) data for June, which will be published at 12:30 GMT.

The US Dollar Index (DXY) held near the 101.40 area, supported by resilient manufacturing activity and elevated long-term Treasury yields. The US ISM Manufacturing PMI slipped to 53.3 in June from 54.0 in May, missing expectations but staying above the 50.0 expansion line.

The US Dollar Index (DXY) holds firm on Wednesday as traders digest weaker-than-expected US economic data and remarks from Federal Reserve (Fed) Chair Kevin Warsh.

The Dow Jones Industrial Average (DJIA) hit a fresh record on Wednesday, clipping 52,500 and completing a round trip from April's rout to all-time highs. The headline number flatters the detail underneath it, because the index that set this record is not quite the one that traded a week ago.

OCBC’s Sim Moh Siong and Christopher Wong highlight that Fed Chair Kevin Warsh’s appearance at Sintra and upcoming United States (US) payrolls are key for the US Dollar (USD).

The Dow Jones futures decline 0.34% to trade near 52,500, while S&P 500 futures gain 0.35%, trading near 7,520. Meanwhile, Nasdaq 100 futures rise 0.48% to trade near 30,380 during European trading hours on Wednesday.

BNY’s Geoff Yu argues that the US Dollar remains undervalued in real effective terms despite recent gains in USD/JPY, EUR/USD and USD/CAD. He notes that Eurozone growth and inflation have softened while U.S. price dynamics strengthen, supporting further appreciation in the Dollar’s REER.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, attracts fresh buyers on Wednesday amid uncertainty over Middle East diplomacy and elevated expectations of US Federal Reserve (Fed) rate hikes.

Deutsche Bank’s Jim Reid and team note that the S&P 500 ended Q2 strongly, with the index up 0.79% on the day and delivering its best quarter since Q2 2020.

OCBC’s Sim Moh Siong notes that the US Dollar (USD) softened slightly as global risk appetite improved on easing geopolitical tensions and a tech rebound.

ING’s Francesco Pesole notes that the Dollar has been giving back recent gains against G10 currencies as equities recover and risk sentiment improves. He highlights expectations for stronger US consumer confidence and softer JOLTS openings, which should still signal a healthy labour market.

The US Dollar (USD) rebounds after a three-day losing streak, with the US Dollar Index (DXY) trading 0.3% higher to near 101.40.

The Dow Jones futures rise 0.08% to trade near 52,610, while S&P 500 futures gain 0.10%, trading near 7,510. Tech-heavy Nasdaq 100 futures led the upward move, rising 0.20% to trade near 30,110 during European trading hours on Tuesday.

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 101.30 during the early European trading hours on Tuesday.

HSBC strategists highlight that the US Dollar (USD) has broken out of prior G10 ranges following an interim US–Iran peace agreement and a shift in Federal Reserve (Fed) messaging.

Scotiabank strategists Shaun Osborne and Eric Theoret note the US Dollar (USD) is easing for a third straight session as Fed hike expectations fade, with swaps now pricing less than 20bps of tightening by September.