The coming week could be pivotal for the US Dollar (USD) as traders prepare for a string of high-impact labor market releases that may shape Federal Reserve policy expectations for the rest of 2025.
Key US Employment Data in Focus
All eyes are on the June Nonfarm Payrolls (NFP) report, set for release on Thursday due to the Independence Day holiday in the US. Analysts anticipate a jobs gain of 110,000—lower than May’s 135,000—with whisper numbers suggesting an even weaker print closer to 100,000. Unemployment is expected to tick up to 4.3%, while wage growth is forecast to hold steady at 3.9% year-over-year.
The week will also feature:
- JOLTS job openings (May)
- ADP private payrolls (June)
- Weekly jobless claims (ending June 28)
If the data confirms labor market softening, markets are likely to price in additional Fed rate cuts, potentially accelerating downside pressure on the dollar.
USD Index Eyes Further Weakness Amid Fed Speculation
The US Dollar Index (DXY) ended last week at multi-year lows, slipping 1.5% and heading for a 2.2% monthly decline. From a technical perspective, DXY has broken key support at 97.72, opening the door toward 95.67 and possibly lower, with major trend support sitting near 94.96.
Markets are now pricing in roughly 65 basis points of Fed easing in 2025, or nearly three rate cuts, following dovish tones from Federal Reserve Chair Jerome Powell and ongoing speculation that Donald Trump may replace Powell with a more dovish candidate if re-elected.
Fed Chair Powell Faces Political Pressure
Powell’s recent testimony before US lawmakers reaffirmed a wait-and-see stance. However, President Trump’s repeated calls for rate cuts—and reports that he’s eyeing replacements like Scott Bessent or Christopher Waller—have added political tension that could weigh on USD sentiment.
Macro Backdrop: Inflation & PMIs in the Spotlight
Last week’s PCE inflation report showed a slight uptick:
- Core PCE YoY: 2.7% (vs 2.6% in April)
- Headline PCE YoY: 2.3%
This reflects persistent inflation despite cooling consumer spending and income. If ISM Manufacturing and Services PMIs this week echo last month’s S&P Global PMI strength, it could provide some support to the dollar—especially if jobs data surprises to the upside.
Other Major Economic Events to Watch This Week
- China PMIs (Monday): Manufacturing expected to edge up to 49.6, Services steady at 50.3.
- ECB Forum (Tuesday): Key central bank speakers including Powell, Lagarde, Bailey, and Ueda will speak in Sintra, Portugal.
- Eurozone CPI (Tuesday): Headline inflation seen rising to 2.0%, core inflation stable at 2.3%.
- Swiss CPI (Thursday): YoY inflation expected at -0.1%, month-on-month flat.
🔍 Conclusion: Will Weak Jobs Data Tip the Fed’s Hand?
This week’s US employment and inflation releases could redefine USD trends and central bank expectations. Traders should brace for volatility across forex markets, particularly for USD pairs, as labor data and geopolitical tensions collide with Fed and political dynamics.
👉 Stay tuned to DailyForex.pk for real-time analysis and updates on how US data will shape the global market outlook.