Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
The US dollar has steadied in recent weeks, but signs are growing that weakness could return in the months ahead.
Despite slightly higher inflation data, the labor market shows a balanced picture, with companies neither expanding nor cutting jobs significantly. This has strengthened expectations that the Federal Reserve could deliver three interest-rate cuts before year-end, a shift that would erode the dollar’s yield advantage — one of the key supports for the greenback over the past two years.
In addition, falling hedging costs tied to lower policy rates and less extreme positioning among investors are reducing the need for dollar exposure. These factors are gradually undermining support for the currency, leaving it vulnerable if Fed easing accelerates.
For now, the dollar remains stable, but momentum is shifting. If rate cuts materialize as expected, pressure on the greenback could intensify heading into the final quarter of the year.