US Dollar Holds Steady, But Risks Point Lower

The US dollar has been stable in recent weeks, but the outlook suggests weakness may return soon.

Recent inflation data came in slightly higher, while the labor market looks balanced — companies are not adding many new jobs, but they are not cutting heavily either. This has raised expectations that the Federal Reserve could cut interest rates up to three times before year-end. Such a move would reduce the dollar’s yield advantage, one of its biggest supports in the past two years.

At the same time, lower hedging costs and lighter investor positioning are reducing demand for holding the dollar. These factors are slowly removing its support base, making it vulnerable if the Fed speeds up policy easing.

For now, the dollar is holding ground. But if the expected rate cuts arrive, pressure on the greenback may increase going into the final quarter of 2025.

Key Levels to Watch:

Upside: 101.26 resistance

Downside: 95.00 support

— Article by Md Golam Rabbani