The U.S. dollar edged lower on Tuesday as investors digested dovish remarks from Federal Reserve Governor Christopher Waller and looked ahead to a heavy slate of U.S. data that could shape the Fed’s final policy decision of the year.

At publication time, the Dollar Index slipped 0.1% to 99.410, resuming its decline after breaking a four-day losing streak on Monday.

Fed tone and data in focus

Waller highlighted emerging risks to the labor market—citing early signs of planned layoffs—and argued for a 25 bp rate cut at the Dec. 9–10 FOMC meeting. The softer tone contrasted with more cautious recent signals from other officials, keeping markets divided on the policy outlook.

With the federal government now reopened, a backlog of economic releases will hit this week, culminating in September nonfarm payrolls on Thursday. Fed-dated pricing currently implies ~40% odds of a 25 bp cut in December, down from about 60% a week ago.

Euro edges up; sterling soft ahead of budget

EUR/USD ticked up to 1.1593, extending Monday’s stabilization. Some strategists see upside risk into year-end on seasonal support and fading French political risk.

GBP/USD eased 0.1% to 1.3152 as traders positioned for Chancellor Rachel Reeves’s Nov. 26 budget, with expectations of revenue-raising measures to meet fiscal rules weighing on sentiment.

Yen firms as long-end yields climb

In Asia, USD/JPY dipped 0.2% to 154.96, with the yen supported by a rise in long-dated JGB yields to multi-decade highs. Investors weighed the potential growth-support package reportedly being prepared by Prime Minister Sanae Takaichi, with talk of a stimulus near $149bn stoking fiscal concerns.

Elsewhere, USD/CNY edged up 0.1% to 7.1117, while AUD/USD was little changed near 0.6493.

What to watch next

• U.S. NFP (Thu): Last major labor read ahead of December FOMC.
• ISM/PMI updates: Fresh signals on activity momentum.
• U.K. budget run-up: Gilt dynamics and sterling sensitivity to tax/spending mix.

The dollar’s near-term path hinges on whether this week’s U.S. data revive rate-cut expectations. A softer payrolls print could extend greenback losses; resilient labor signals would likely cap downside and keep the policy debate finely balanced.