Market Drivers – US Session: Dollar Slumps as Markets Brace for Fresh U.S. Data and Global Inflation Signals

The U.S. Dollar continued its sharp retreat on Tuesday, pressured by a series of softer economic readings and growing expectations that the Federal Reserve may deliver additional interest-rate cuts in the coming months. Investors are increasingly positioning for more clarity on the health of the world’s largest economy as a wave of new U.S. data looms.

Markets are now shifting their attention toward upcoming reports on mortgage applications, durable goods orders, jobless claims, and business activity surveys. These releases are expected to offer fresh insight into whether the recent slowdown in spending and hiring is gaining momentum. The Federal Reserve’s Beige Book will also play a key role in shaping expectations ahead of the next policy meeting.

The euro and the British pound extended their advances against the weakening dollar. The euro benefited from improving sentiment ahead of new financial stability assessments in the region, while sterling pushed higher as traders awaited the release of the UK’s Autumn Budget. Both currencies have been buoyed by a broader shift away from the dollar as U.S. yields ease.

In Asia, the Japanese yen strengthened as the dollar’s decline accelerated, while traders looked toward upcoming economic indicators that could guide expectations for Japan’s growth outlook. The Australian dollar also gained ground, supported by anticipation surrounding fresh inflation data and upcoming remarks from policymakers.

Commodity markets reflected the cautious mood. Oil prices slipped as concerns resurfaced about potential oversupply and geopolitical tensions. Meanwhile, gold rose to its strongest levels in two weeks, supported by the broad pullback in the dollar and persistent expectations that U.S. monetary policy may soon become more accommodative. Silver initially rallied but later surrendered its gains as traders locked in profits.

Across global markets, investors are navigating a delicate balance: signs of cooling economic activity in the United States, a softer dollar, and shifting inflation trends across major economies. With several high-impact reports on the horizon, markets are preparing for another volatile session as they await clearer signals on the next stage of the global monetary cycle.