Dollar Remains Weak Ahead of Key Inflation Data Release
New York – The U.S. dollar continued to trade at subdued levels Monday, September 8, 2025, following a dip to a three-week low on Friday triggered by weaker-than-expected U.S. non-farm payroll data. the currency’s performance is now closely tied to upcoming inflation figures, with potential implications for interest rate expectations adn global currency markets.
The dollar’s recent weakness reflects investor reassessment of the Federal Reserve’s monetary policy path. Disappointing jobs data has fueled speculation that the Fed may slow or pause its interest rate hikes, diminishing the dollar’s appeal. This comes as other global economies face distinct challenges, potentially bolstering the dollar shoudl U.S.economic data prove more resilient.Currently, the dollar index is holding steady at 97.767 points, after falling to 97.430 on Friday,according to The Wall Street Journal. Financial analyst Chris Tourner anticipates potential short-term support for the dollar this week if inflation data exceeds expectations or as U.S. companies prepare for tax payments due September 15, potentially driving the index up to 98.50.Economists surveyed by The wall Street Journal predict a 0.3% increase in monthly inflation for August, following a 0.2% rise in July, though a 0.4% increase remains a possibility. currency market expert Jin Foley suggests that stronger inflation data could prompt investors to reduce their “short dollar” positions – bets that the dollar will decline – potentially leading to a rally.
Data from the Futures trading Committee indicates speculators have maintained net short positions on the dollar since mid-June, leaving the currency vulnerable to a “short covering” rally. This vulnerability is amplified by ongoing economic and political uncertainties in other major economies, including a government crisis in France, budget concerns in Britain, and a leadership contest within Japan’s Liberal Democratic Party.
foley further noted that positive inflation data released next Thursday could lead markets to scale back expectations of interest rate cuts, potentially pushing the euro down to $1.16 from its current level of $1.1730.