USD: It is too soon to say that we have reached the ‘peak of the bearish trend’ in the USD – Ing

Although the forecasts are overwhelmingly bearish over the dollar now, and some are bassists on a horizon of several quarters, a possible surprise that could still occur is the possibility of early cuts of rates by the Fed, says Francesco Pesole, FX Analyst of ING.

The DXY will continue to support in the 96.35/50 zone

“The US employment data today will have a great weight in that story. President Powell, leading the group that advocates that the Fed maintains unchanged fees, argues that persistent inflation and a solid labor market mean that the policy rate should be maintained slightly restrictive in 4.25-4.50% for the moment. Clearly, any negative surprise in the employment report would weaken its position and It would allow the market to move forward with the valuation of a rate cut at the July meeting.

“In terms of the Employment Report, the consensus awaits a +106K number. Bloomberg’s ‘whisper’ number is now in +97K and has been decreasing, especially after the publication of payrolls of the private sector ADP yesterday saw the first fall in payrolls since March 2023. Regarding the unemployment rate, the growth of employment is expected to be kept Labor Force, make the unemployment rate rise to 4.3% from 4.2% – still very low.

“Unless there is a negative publication of the NFP today or a great increase in the unemployment rate, we would expect the dollar to continue consolidating before the public holiday of July 4 in the USA. However, the dollar faces more threats next week, when the deadline of July 9 for commercial agreements and President Trump could begin to threaten to threaten with 50% tariffs for 50% again for the commercial partners. We hope that the DXY continues to find support in the 96.35/50 zone, and we slightly favor consolidation for a long weekend.