Dollar Loses Ground — Can Friday’s Jobs Report Turn It Around?

The dollar is losing ground again. The US Dollar Index slipped to around 99.68, its lowest level in seven weeks, as hopes for a US-Iran deal and softer US labour data weighed on the greenback.

Asian currencies have taken advantage of the move, while the yen remains stronger after last week's intervention. USD/JPY is hovering near 157.70, well below the 164 area reached before Tokyo and Washington stepped in.

The next big test comes from Friday's US jobs report. ADP showed private payrolls rising by just 44,000 in July, missing the 68,000 estimate and adding to signs that the labour market is losing some momentum.

A weak NFP could put further pressure on the dollar and give USD/JPY another reason to move lower. A stronger-than-expected report, however, could quickly revive dollar demand.

For USD/JPY, 157.30 is the first downside level to watch, while a move back above 159.60–159.85 would suggest buyers are starting to regain control.

The bigger picture is becoming more complicated for dollar bulls. With softer US data, a weaker dollar and intervention risk now sitting alongside the Fed outlook, buying USD/JPY on every dip is no longer the easy trade it once was.