Dollar hovers near eight-week lows ahead of U.S. jobs report

The dollar is facing pressure as it hovers around eight-week lows ahead of a key U.S. jobs report that could impact the Federal Reserve’s decision on interest rates. The euro, on the other hand, is holding steady after the European Central Bank’s rate cut, with inflation still above target.

Investors are closely watching the U.S. dollar index, which has been sliding this week due to weaker economic data. The possibility of Fed rate cuts is back on the table, with markets pricing in potential cuts by the end of the year.

Traders are anticipating a softer non-farm payrolls report, with expectations that job growth may fall below economists’ forecasts. The Fed is not expected to make any immediate changes at its upcoming policy meeting, but markets are eyeing potential rate cuts later this year.

The euro has seen a slight uptick following the ECB’s rate cut, but the central bank’s inflation forecasts have raised questions about further easing. Sterling is also on the rise, while the yen has strengthened against the dollar.

Japanese authorities are monitoring the yen’s movements closely, with concerns about rising import costs impacting inflation and wage growth. The Bank of Japan is expected to make a policy decision next week, with speculation of a reduction in bond purchases to tighten credit conditions.

Overall, the currency markets are in flux as investors await key economic data and central bank decisions that could shape the future direction of interest rates and monetary policy.