The dollar was falling as the market reverses a trend of “excessive” optimism towards the currency amid growing evidence that the Fed has likely finished raising interest rates, Commerzbank said.
“What we are seeing is typical for the greenback at the end of a Fed rate hike cycle: Excessive dollar optimism on the part of market participants who had seen the dollar as a one-way street has to be priced out,” it said.
Standard Chartered said the unemployment rate has begun rising from a cyclical trough, marking a turning point which is “associated with dollar weakness.”
“Confirmation that the labor market is softening while inflation is on a steady downtrend could encourage policy rate cuts and weaken the dollar.”
Typically after a point when unemployment keeps rising, the dollar tends to rebound, it said.