Dollar’s Prolonged Slump Fuels Speculation of Aggressive Fed Rate Cuts

The US dollar extended its losing streak to five consecutive weeks, marking the longest decline since April 2023. The Bloomberg Dollar Spot Index tumbled 0.7% on Friday, cementing an 8% year-to-date drop against major global currencies. Traders swiftly repriced Fed expectations following weak jobs data, with some betting on a 50-basis-point cut this month.

TD Securities strategist Jayati Bharadwaj notes markets are now pricing in a dovish Fed trajectory, reinforcing structural bearishness on the dollar. Fiscal risks and trade policy uncertainties under the TRUMP administration compound the currency's weakness. All eyes turn to Thursday's inflation report, which Bloomberg forecasts will show accelerating August prices - a potential inflection point for monetary policy and dollar sentiment.