The US Dollar Index (DXY) dropped below 99 on Monday as investors grew cautious ahead of the US-China trade negotiations scheduled in London.
This decline comes despite a strong US Nonfarm Payrolls report released last Friday, which initially boosted the dollar to 99.35. The focus has shifted from the positive employment data to the outcome of the trade talks between the two economic giants.
Investors are reducing their long positions in the US dollar, awaiting the results of the meeting aimed at easing trade tensions and reviving the tariff reduction spirit seen in last month’s Geneva talks.
A recent phone call between US President Donald Trump and Chinese President Xi Jinping improved market sentiment, with Trump expressing confidence that the negotiations will go “very well.”
The economic calendar is light on Monday, and the impact of Friday’s robust payroll data is fading. The Federal Reserve remains in a blackout period ahead of next week’s meeting, which is expected to maintain current interest rates at least until September, as the employment report supports a steady policy stance.
Overall, the US dollar is the weakest among G8 currencies today, reflecting market caution as traders await clarity on trade relations and upcoming economic data, including inflation reports later this week.
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