NEW YORK, June 29 – The dollar slipped slightly on Monday but remained close to a 13-month peak, driven by optimism surrounding U.S. economic growth, expectations for a Federal Reserve interest rate increase, and the ongoing AI-driven surge in U.S. stock markets that is rapidly attracting investment.
Meanwhile, the Japanese yen fell to its lowest value against the dollar since 1986.
A shift toward a more hawkish stance during the Fed’s June meeting, now under new Chair Kevin Warsh, has led traders to raise their expectations for rate hikes this year, as inflation stays well above the Fed’s goal of 2% annually.
This week, attention in the U.S. will largely be on Thursday’s jobs report for June. The fact that payrolls have surpassed predictions for three consecutive months has emboldened the Fed’s hawkish tone. Still, improvements in the labor market might lead to a more dovish reassessment of current financial strategies.
“The labor market seems to be gaining momentum,” noted Mark Chandler, chief market strategist at Bannockburn Global Forex. “Concerns about a slowdown there seem to be fading.”
The data is anticipated to indicate that 110,000 jobs were added last month, with the unemployment rate remaining steady at 4.3%, according to economists surveyed by Reuters.
Additionally, traders are monitoring the situation regarding the war with Iran.
Sources indicated to Reuters that Iranian and U.S. technical teams are set to meet in Doha shortly to discuss steps toward implementing an interim peace deal, following retaliatory attacks over the weekend that risked derailing the tentative agreement.
The dollar index, assessing the U.S. currency’s performance against six others, declined by 0.17% to 101.19. For this month, it has climbed 2.28%, marking the largest monthly gain since July 2025.
“This is significant because there’s been lengthy discussion about a structural decline in the dollar’s value since April last year,” commented Jane Foley, chief currency strategist at Rabobank. “However, even if you’re convinced of this, it’s vital to recognize potential for a cyclical uptrend.”
Recent data from the U.S. market regulator showed that investors hold their largest bullish positions against the dollar since 2019, totaling approximately $36.4 billion, according to LSEG.
The euro increased by 0.25% to $1.1412 after touching a 13-month low against the dollar the previous week. Nonetheless, it has declined by 2.08% this month.
