The U.S. dollar stabilized close to multi-week lows on Thursday as investors awaited upcoming economic releases expected to reinforce expectations for a Federal Reserve rate cut next month.
At 04:05 ET (08:05 GMT), the Dollar Index, which measures the greenback against a basket of six major currencies, ticked up 0.1% to 97.709, slightly above the two-week low recorded in the previous session.
Dollar under pressure
The greenback has struggled for most of August following disappointing U.S. jobs data, with further pressure this week after July’s modest consumer price growth was reported. Analysts noted that this indicated President Donald Trump’s tariffs had yet to significantly increase inflation, allowing the Fed to focus on signs of a cooling labor market.
Traders are now pricing in a 99% chance of a 25-basis-point rate cut at the September Fed meeting, according to Investing.com’s Fed Rate Monitor Tool.
U.S. Treasury Secretary Scott Bessent fueled speculation by suggesting that an aggressive half-point cut could be possible in light of recent weak employment figures.
“Markets aren’t pricing in anything over 25bp for now, and a 50bp option would probably not be taken seriously unless there are some hints in that direction at the Jackson Hole symposium, or August jobs data hugely disappoints again,” analysts at ING noted.
Fed Chair Jerome Powell is scheduled to speak at the Wyoming symposium next week, having used the same forum last year to signal impending rate cuts. In the meantime, traders are eyeing the July producer price index for signs that tariff-driven price increases are accelerating, alongside weekly jobless claims for more insight into labor market strength.
Eurozone GDP in focus
In Europe, EUR/USD fell 0.2% to 1.1680, just under Wednesday’s high of $1.1730, a level last reached on July 28.
Second-quarter growth data for the eurozone is expected later in the session, likely showing only 0.1% growth, a slowdown from 0.6% in Q1.
“EUR/USD is approaching tomorrow’s U.S.-Russia summit with good momentum, and the option market does not seem to be pricing in major volatility risk. One-week EUR/USD implied volatility is at the bottom of its recent range and in line with historical volatility,” ING commented.
GBP/USD traded slightly higher at 1.3572 after the release of U.K. data showing the economy grew 0.3% in Q2 2025, faster than expected but still down from Q1’s 0.7% growth. The Bank of England had forecast 0.1% growth for the April-June period.
“It’s positive news for the gilt market ahead of the Autumn fiscal event, but it doesn’t change the narrative for the Bank of England at this moment (inflation and jobs markets are the two main inputs), hence the reaction in sterling has been muted,” ING said.
Yen rises on rate hike speculation
Elsewhere, USD/JPY dropped 0.7% to 146.43 as the yen strengthened on speculation that the Bank of Japan might raise rates. This followed comments from U.S. Treasury Secretary Scott Bessent suggesting the BOJ was lagging in tackling inflation.
His remarks contrast with those from BOJ Governor Kazuo Ueda, who has largely dismissed concerns about delays in rate hikes to combat persistent inflation.
USD/CNY edged down to 7.1721, extending earlier-week declines after the U.S. and China agreed to extend their trade truce by 90 days. Attention now shifts to key Chinese economic reports due on Friday, including industrial production and retail sales.
AUD/USD fell 0.2% to 0.6536 after July labor data showed Australia’s job market slightly underperformed expectations, reinforcing the view that the sector is cooling and increasing the likelihood of further rate cuts by the Reserve Bank of Australia.
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