Dollar Slumps as Soft Data Fuels Fed Rate-Cut Bets

Key Takeaways:

*USD index drops below 98.00 after weak NFP, softer CPI, and Trump’s dismissal of the BLS chief fuel rate-cut bets.

*U.S. Treasury yields tumble over 1% across maturities, signaling a dovish shift in Fed expectations.

*Dow gains 460+ points as lower yields lift market sentiment ahead of Friday’s retail sales data.

Market Summary:

The U.S. dollar came under renewed selling pressure this week, extending losses of more than 2.5% from its two-month high following last Friday’s weaker-than-expected nonfarm payrolls report. The dollar index slipped below the 98.00 mark after Tuesday’s softer U.S. CPI reading compounded bearish sentiment.

The NFP miss was further overshadowed by President Trump’s abrupt dismissal of the Bureau of Labor Statistics chief, a political shock that accelerated the greenback’s decline. Tuesday’s CPI print, coming in weaker than the prior month, reinforced market expectations that the Federal Reserve may deliver a rate cut as early as September.

U.S. Treasury yields fell sharply in the latest session, with both short- and long-dated maturities down more than 1%, reflecting a dovish shift in rate expectations. Wall Street, however, benefited from the easing yield environment, with the Dow Jones Industrial Average climbing over 460 points, or 1%, to lead the major indices higher.

Markets now turn their attention to Friday’s U.S. retail sales data, which could provide further cues for the Fed’s policy path. A weaker reading would likely deepen dollar losses while extending the equity rally.

Technical Analysis 

U.S. Dollar, H4

The U.S. dollar index has accelerated its decline, decisively breaking below the critical 98.10 support level that had previously underpinned its uptrend. This technical breakdown has effectively erased the index’s previous gains, confirming a shift in market control to bearish participants.

The deteriorating technical picture is reinforced by momentum indicators. The Relative Strength Index, after struggling to maintain position above its neutral 50 level, has resumed its downward trajectory toward oversold territory. This failure to sustain momentum suggests weakening buying interest. Similarly, the Moving Average Convergence Divergence indicator remains entrenched below the zero line, having failed in its recent attempt to cross into positive territory—a configuration that typically signals persistent selling pressure.

Resistance level: 98.45, 99.25

Support level: 97.20, 96.70

NASDAQ, H4

The technology-focused index has reasserted its dominant uptrend, shaking off a brief dip below its ascending channel to establish a series of higher lows and fresh all-time highs. This robust recovery underscores the index’s underlying strength and reaffirms its bullish trajectory as market leadership remains firmly in the hands of growth-oriented technology stocks.

Technical indicators continue to support the case for further upside. The Relative Strength Index approaches overbought territory, reflecting sustained buying pressure, while the Moving Average Convergence Divergence maintains its upward trajectory above the zero line—a configuration that typically confirms healthy bullish momentum. The index’s ability to rebound from channel support and establish new highs suggests the recent consolidation may have served to refresh the uptrend rather than mark a reversal point.

Resistance level: 24,080.00, 24,320.00

Support level:23,650.00, 23,270.00