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Is U.S. Trade Uncertainty Keeping Dollar Buyers on Edge?
The dollar’s weakness comes as traders await fresh signals on U.S. trade policy. Tensions between Washington and Beijing remain unresolved, despite recent softening in tone from both sides.
While President Trump has suggested progress in trade talks, Chinese officials have denied ongoing negotiations. Treasury Secretary Scott Bessent’s remarks on Sunday also lacked confirmation of active discussions, reinforcing market uncertainty. The dollar has lost over 4% against both the euro and yen through April, on course for its largest monthly decline in more than two years.
Will Friday’s Jobs Report Trigger a Fed Rethink?
Focus is now turning to Friday’s U.S. employment report, a critical indicator of whether trade-related volatility has impacted real-world economic activity. Expectations suggest continued job growth, albeit at a slower pace.
Federal Reserve officials, including Chair Jerome Powell, have indicated openness to rate cuts if risks to economic growth materialize. However, analysts at Saxo Bank emphasize that the Fed will need clear evidence from hard data—particularly on jobs and consumption—before considering policy changes, suggesting that markets may be pricing in cuts too aggressively.
How Are Global Events Weighing on Dollar Sentiment?
Several other major economic releases this week could further influence dollar positioning. First-quarter U.S. GDP figures and the Fed’s preferred inflation gauge, core PCE, are scheduled, alongside European GDP and inflation readings.
Meanwhile, outside of the U.S., traders are monitoring Australian inflation data and Canadian elections, although these events are expected to have a limited direct impact on DXY.
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