Dollar Bears in Control: Why the Greenback Is Losing Its Grip

The US Dollar Index Breakdown

The US Dollar Index (DXY) has plunged below the 98.00 threshold, marking its weakest performance since mid-October. What sparked this sudden capitulation? The culprit was a heavily delayed labor report that exposed meaningful deterioration in America’s employment landscape—a reality that outweighed other concerning economic signals from abroad. The selloff was relentless, pushing the Greenback to levels not seen in weeks.

Currency Pairs Under the Microscope

Looking at today’s cross-rate action, the USD faltered against most majors. EUR/USD found support around 1.1750, bolstered by a tightening yield differential between the Federal Reserve and the European Central Bank despite Germany’s manufacturing sector remaining submerged in contraction territory (PMI at 47.7).

The Cable (GBP/USD) hovered near 1.3430, with traders now circling November 20 for the UK’s Consumer Price Index release. The market is bracing for a 0% month-on-month reading with annual inflation holding at 3.5%—data that could influence the Bank of England’s rate decision announcement on Thursday.

USD/JPY told a different story, breaking through the 155.00 barrier to trade around 154.65. The yen has emerged as the unlikely winner today, as mounting expectations suggest the Bank of Japan will defend the currency with a rate hike to 0.75% by week’s end, fighting persistent inflation pressures.

The Aussie’s Struggle

Meanwhile, AUD/USD remains mired near the 0.6630 zone despite broad dollar weakness—a puzzling dynamic explained by disappointing data from China, Australia’s largest trading partner. Beijing’s November Retail Sales cratered to just 1.3% from a prior 2.9%, while Industrial Production came in at 4.8% annualized, undershooting the 5% forecast. For traders looking at 44 USD to AUD conversion rates, this translates to roughly 66.30 Australian Dollars per 100 US Dollars at current market prices—a reflection of the Aussie’s struggle to capitalize even when the Dollar retreats.

Gold Captures the “Perfect Storm”

Precious metals surged on Tuesday as cooling labor data collided with rising inflation anxiety, creating what traders are calling a “perfect storm” for bullion. Gold rocketed from the $4,270 zone earlier in Asia-Pacific trading hours toward $4,300, recovering a portion of its losses as safe-haven demand accelerated.

The Bottom Line

The Dollar’s weakness is not temporary noise—it reflects a fundamental reassessment of US labor market health coupled with shifting rate expectations. As economic data continues rolling in from major central banks this week, volatility will likely persist across all currency pairs.