DXY: US Dollar Seeks to Snap Six-Month Losing Run. What’s Ahead for the Greenback?

It’s been a half-year stretch with lower lows for the buck. But not anymore? The American currency is eyeing a reversal of the long-term bearish trend.

📈 Bucking the Trend

• The US dollar index DXY is finally flexing some muscle after half a year in the red. The currency gauge, tracking the dollar against six peers, is up 2.1% this month to float under 99.00, putting it on track for its first monthly gain since December — and potentially its best July since 2019.
• Fed rate cut chatter and softening labor data were likely behind the dollar’s pullback. But this month’s rally hints at a potential trend reversal, with the greenback’s index now poised to close July with its biggest gain in six years.
• The rally is all the more notable as rate cut expectations haven’t gone away — but other forces are now at play.

⛵ Greenback Finds Tailwind

• One major catalyst: Washington’s trade deal with Europe, which investors see as heavily skewed in favor of the Trump administration. The deal has boosted confidence in US growth resilience and export competitiveness.
• That perceived edge has reinvigorated demand for the greenback, especially against the euro, which took a 1.3% single-day hit earlier this week.
• Still, the buck’s gauge remains down 10% year-to-date, underscoring how steep the climb will be to fully reverse its bearish structure.

👀 Fed and Payrolls Ahead

• The next hurdle? The Federal Reserve’s rate decision due Wednesday. Markets are pricing in no change, with rate cuts seen more likely to resume in September.
• Friday’s nonfarm payrolls will also be a sight to see — a miss could revive dollar selling if it sharpens concerns about US economic momentum.
• If the Fed holds rates and the jobs data stays solid, it might just give the greenback the second wind it’s been waiting for.