Dollar is Breathing Ahead of the Jobs Data

On Thursday, the dollar steadied below recent highs as traders awaited US jobs data, finding reassurance in Federal Reserve Chairman Jerome Powell’s remarks suggesting potential interest rate cuts later in the year.

The yen remained range-bound amid prospects of government intervention, showing little movement from the 151.56 level it has held for the past three weeks.

After a 0.6 percent rise on Wednesday, the euro returned to its year-long range, reaching $1.0837, buoyed by lower-than-expected European inflation data, heightening expectations for a rate cut by the European Central Bank in June.

Powell’s remarks struck a balanced tone, indicating that policy decisions would hinge on economic data. Traders focused on his assertion that recent data did not fundamentally alter the outlook.

ANZ analysts noted, “The speech largely confirmed expectations of Federal Reserve interest rate cuts this year, with timing contingent on data. By July, we anticipate the Fed will likely have sufficient confidence to commence rate reductions.”

The Australian dollar surpassed its 200-day moving average, reaching $0.6568 on Thursday.

The New Zealand dollar also climbed 0.7 percent above $0.60 and reached $0.6013 in recent trading.

The British pound traded within its December-established range, reaching $1.2645.

With Chinese markets closed for a holiday, attention turned to the release of European PMI readings later on Thursday, followed by eagerly anticipated US jobs data scheduled for release on Friday.