US Dollar Forecast: DXY Falls as Weak ADP Jobs Data Fuels Fed Cut Expectations

DXY Slips as Traders Lean Into Fed-Cut Story

The U.S. Dollar Index is under pressure on Wednesday, and sellers aren’t hiding it. The break below the 50-day moving average at 99.117 flipped that level into fresh resistance, and losing the swing bottom at 98.991 only reinforced that momentum. With yields sliding and the market leaning hard into next week’s Fed cut, the dollar doesn’t have much fundamental support.

Soft ADP payrolls were the spark. A 32,000 drop in private jobs versus expectations for a gain kept buyers on the sidelines and pushed sentiment further toward the idea that the labor market is cooling faster than anticipated.

At 14:55 GMT, DXY is trading 99.022, down 0.298 or -0.30%.

Fundamentals: Fed Cut Bets Keep Building

Yields moved lower across the curve after the weak ADP print, and that matters for the DXY because falling returns on U.S. assets usually reduce dollar demand. The 10-year slipped to 4.065%, while the 2-year fell to 3.486%, reflecting growing conviction that easier policy is coming.

Rate expectations continue to steer the dollar. Futures now assign nearly 90% odds of a quarter-point cut next week, following cuts in September and October. Fed Governor Waller reinforced that view by saying the labor market is soft enough to justify another move, which keeps sellers active in the dollar. When traders feel certain policy is easing, the dollar tends to weaken.

Political noise is also in play. With Kevin Hassett emerging as the frontrunner for Fed chair in 2026, analysts warn that a potential “shadow chair” dynamic could complicate communication. Uncertainty around future policy rarely supports the dollar.

Foreign Currencies: Flows Favor Anything Not the Dollar

Cross-currency flows remain simple: pressure on the dollar is benefitting nearly everything else. With the DXY down, traders continue rotating out of dollar longs and into currencies with clearer policy paths. As long as Fed-cut expectations hold, sellers will stay comfortable pressing the move.

Yields & Risk Tone: Bond Rally Undercuts DXY

Treasury buyers stepped in after the ADP release, and lower yields have deepened pressure on the dollar. The bond market is signaling confidence in additional easing. If ISM Services or jobless claims come in soft, yields likely fall again — and the DXY likely weakens alongside them.

Technical Picture: Sellers in Control Below Key MAs

Below the 50-day at 99.117, the index faces resistance there and again at the 200-day at 99.597. Losing the 98.991 swing bottom opens the path toward 98.565, with the retracement zone at 98.307–97.814 as the next area sellers may target.

Conclusion: Near-Term Bias Stays Bearish

With yields falling, Fed-cut conviction firm, and the DXY trading below both key moving averages, the near-term bias remains bearish. Sellers stay in control unless upcoming data meaningfully challenges the easing narrative.

More Information in our Economic Calendar.