The U.S. Dollar Index has had a rough six months. It is down about 11.4% on a total-return basis, marking its worst first-half performance in decades. The dollar’s position has been undermined by recent macro releases, such as yesterday’s ADP report and the latest negative GDP figures. Meanwhile, the Federal Reserve’s stance remains hawkish, though there is a faint hope of a July rate cut (currently 25.3%)
The next big test comes with the U.S. jobs report (non-farm payrolls) Today. If hiring slows again, the Fed will feel more comfortable easing policy sooner. That would likely push the dollar lower still. Yet the dollar might not fall in a straight line. Technical indicators show it is oversold—traders have sold so much that even a small positive surprise in the jobs data could spark a quick bounce as they rush to buy back dollars.
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