The US dollar posted slight gains against both the euro and the Japanese yen, but remained near the lows recorded on Friday, after weak US jobs data boosted bets on Federal Reserve interest rate cuts and triggered a sharp selloff in the US currency.

Goldman Sachs expects the Federal Reserve to implement three consecutive interest rate cuts of 25 basis points starting in September, with the possibility of a 50-basis-point cut if the next jobs report shows a further rise in unemployment.

The firm also believes that the European Central Bank (ECB) has already concluded its monetary easing cycle.

Meanwhile, economists raised their growth forecasts for the Eurozone and Japan following what were described as moderate trade agreements, while affirming that Friday’s US jobs report showed the American economy is nearing a recession.

Elsewhere, analysts said that the dismissal of the Bureau of Labor Statistics (BLS) director on Friday and the resignation of Federal Reserve Governor Adriana Kugler could prompt the Federal Open Market Committee (FOMC) to adopt a more assertive stance in order to defend its independence. They noted that Kugler’s replacement would have only one vote on the committee.

The euro was last down 0.12% at $1.15592, after hitting $1.15855 on Friday.

The US Dollar Index — which measures the performance of the dollar against six major currencies — stood at 98.816, after earlier touching a one-week low of 98.609.

Thierry Wizman, global interest rates and currency strategist at Macquarie Group, stated: “Traders have likely concluded that the jobs report gave President Donald Trump further justification to ‘fire’ Jerome Powell.”

He added: “Or at least more support to appoint someone structurally more dovish as Fed Chair,” noting that the recent employment data has shifted the market’s outlook on the federal funds rate target one year from now.

Interest Rate Cuts

Financial markets now indicate a 92% probability that the Federal Reserve will cut interest rates at its upcoming September meeting, up from 63% a week ago. Markets are also pricing in a total of 130 basis points in rate cuts by October 2026, up by 30 basis points from expectations before Friday’s jobs data.

The Japanese yen fell by 0.14% to ¥147.3 per dollar, after minutes from the Bank of Japan’s June monetary policy meeting showed that some board members said the central bank might reconsider rate hikes if trade tensions ease.

Focus remains on trade-related uncertainty, following new tariffs imposed by Trump last week on imports from dozens of countries, which have raised concerns about the health of the global economy.

The Swiss franc extended its losses for a second consecutive day, falling 0.1% to 0.8089 against the dollar, after declining 0.5% in the previous session. However, it remains stronger than its levels before Friday’s data, when it traded around 0.8128.

Switzerland is seeking to present a “more attractive offer” in its trade talks with Washington, aiming to avoid a 39% US tariff on its exports — a move that threatens the country’s export-dependent economy.

In other currency markets, the Australian dollar declined by 0.05% to $0.6464, while the New Zealand dollar dropped by 0.1% to $0.5898.

Gold prices declined in European markets on Tuesday for the first time in four sessions, retreating from a two-week high due to active correction and profit-taking, moving into negative territory under pressure from a rebound in the US dollar.

After the probability of a Federal Reserve interest rate cut in September rose, investors are now awaiting multiple economic data releases and comments from monetary policymakers to gain further insight into the likely path of US interest rates for the remainder of the year.

The Price

• Gold prices today: Gold fell by 0.25% to $3,365.79, down from the opening level of $3,373.71, after recording a session high of $3,382.49.

• At Monday’s settlement, gold prices rose by 0.35%, marking a third consecutive daily gain, and reached a two-week high of $3,385.43 per ounce, supported by declining US yields.

The US Dollar

The US Dollar Index rose by 0.35% on Tuesday, extending its gains for the second straight session, as it continued to rebound from a two-week low of 98.59 points, reflecting sustained strength in the US dollar against a basket of global currencies.

In addition to buying from lower levels, the dollar's rebound is also supported by a pause in the decline of 10-year US Treasury yields, as markets await more evidence on the Federal Reserve's interest rate trajectory.

US Interest Rates

• San Francisco Federal Reserve President Mary Daly stated on Monday that, given increasing evidence of weakness in the US labor market and the absence of any indication of persistent tariff-driven inflation, the time has come to cut interest rates.

• Following her remarks, CME Group’s FedWatch Tool showed that the probability of a 25-basis-point rate cut in the September meeting rose from 75% to 88%, while the likelihood of no change dropped from 25% to 12%.

• The probability of a 25-basis-point rate cut in October also increased from 95% to 97%, while the chance of no change fell from 5% to 3%.

• Traders have raised their expectations for Fed rate cuts this year after the dismal jobs data, now forecasting around 63 basis points of easing by December, up from 35 basis points previously.

• To reprice these expectations, investors await key data later today on the performance of the US services sector at the end of July.

Gold Outlook

• Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: “Short-term bullish momentum has improved… The core narrative supporting gold prices is that the Federal Reserve still appears positioned to actually cut interest rates in September.”

• Wong added: “I still don’t expect gold to surge strongly above $3,450 per ounce unless there is a clear catalyst pushing prices to that level.”

SPDR Fund

Holdings of gold by the SPDR Gold Trust, the world’s largest gold-backed ETF, rose by approximately 1.72 metric tons on Monday, bringing the total to 954.8 metric tons — rebounding from 953.08 metric tons, the lowest level since July 21.

The euro declined in European markets on Tuesday against a basket of global currencies, extending its losses for the second consecutive day against the US dollar and moving away from a two-week high, due to active correction and profit-taking, alongside a rebound in US dollar levels ahead of key economic data from the United States.

Amid the entrenched inflationary pressures currently facing policymakers at the European Central Bank, the likelihood of a European interest rate cut in September has declined. To reprice these expectations, investors are awaiting further economic data from the Eurozone.

The Price

• EUR/USD exchange rate today: The euro fell against the dollar by 0.15% to $1.1554, down from today’s opening price of $1.1568. The highest level recorded was $1.1588.

• The euro ended Monday’s session down 0.15% against the dollar, marking its first loss in the past three days, after earlier hitting a two-week high at $1.1597.

The US Dollar

The US Dollar Index rose by 0.15% on Tuesday, extending its gains for the second straight session, as the currency continued to recover from a two-week low of 98.59 points, reflecting sustained strength in the US dollar against a basket of global currencies.

This rebound comes ahead of key US economic data set to be released later today, concerning the performance of the services sector in July, which provides a strong indicator of the pace of US economic activity during the third quarter of this year.

European Interest Rates

• The Consumer Price Index in Europe recorded a 2.0% rise in July, higher than market expectations of a 1.9% increase, and matching the previous reading of a 2.0% rise.

• These figures indicate persistent inflationary pressures on policymakers at the European Central Bank.

• According to Reuters sources, a clear majority at the latest ECB meeting expressed a preference to keep interest rates unchanged in September — for the second consecutive meeting.

• Market pricing of a 25-basis-point rate cut by the European Central Bank in September is currently holding below 30%.

• To reprice these expectations, investors will closely monitor upcoming economic data from Europe, in addition to statements from ECB officials.

The Japanese yen rose in Asian markets on Tuesday against a basket of major and minor currencies, extending its gains for the third consecutive day against the US dollar and recording its highest level in two weeks, after the minutes of the Bank of Japan's meeting indicated a resumption of monetary policy normalization before the end of this year.

In order to reprice expectations regarding the Bank of Japan's potential interest rate hike of 25 basis points at the upcoming September meeting, investors are awaiting the release of further key data on developments in the world’s fourth-largest economy.

The Price

• USD/JPY exchange rate today: The dollar declined against the yen by 0.3% to ¥146.62, the lowest since July 24, down from the opening price of ¥147.08. The highest level recorded was ¥147.15.

• The yen posted a 0.2% gain against the dollar at Monday’s settlement, marking its second consecutive daily gain, amid a decline in the yield on 10-year US Treasury bonds.

Japanese Interest Rates

• The minutes of the June monetary policy meeting showed that some members of the Bank of Japan’s board stated that the central bank would consider resuming rate hikes if trade tensions ease.

• Following last week’s meeting, the Bank of Japan confirmed that it would raise interest rates if economic and price conditions align with expectations.

• Bank of Japan Governor Kazuo Ueda stated that the recent trade agreement between the United States and Japan represents a significant positive step toward enhancing economic stability by reducing uncertainty that has long weighed on future outlooks.

• Market pricing of the Bank of Japan raising interest rates by 25 basis points at the September meeting is currently holding above 50%.

• To reprice these expectations, investors are awaiting more data on inflation, unemployment, and wage levels in Japan.

US Bond Yields

The yield on 10-year US Treasury bonds fell by 0.2% on Tuesday, deepening its losses for the third straight session and reaching a three-month low at 4.186%, which is putting downward pressure on the US dollar exchange rate.

This development in the US bond market follows the US jobs report released on Friday, which revealed clear weaknesses in the labor market, prompting traders to expect the Federal Reserve to implement at least two interest rate cuts before the end of this year.

Goldman Sachs expects the Federal Reserve to carry out three consecutive 25-basis-point cuts starting in September, with the possibility of a 50-basis-point cut if the unemployment rate rises further in the next report.

Additionally, President Donald Trump's dismissal of a senior US statistics official and the resignation of Federal Reserve member Adriana Kugler have heightened market concerns about the stability of the world’s largest economy.