Dollar Rises Slightly, But Sentiment Remains Bearish
The recent recovery in the US dollar is expected to be short-lived, according to a Reuters survey of forex strategists. The consensus is that the dollar could stabilize briefly, but is at risk of broader weakness towards the end of 2026 as markets continue to hold onto expectations of interest rate cuts and concerns about the Federal Reserve's independence remain.
On Wednesday (February 4th), the dollar indicator strengthened slightly again. The DXY was around 97.55 (+0.11%), while the market digested weak US jobs data—ADP was only +22,000 in January—which typically leaves room for the "Fed is easing" narrative.
The "Warsh nomination" effect briefly boosted the dollar, as some market participants believed Kevin Warsh could lead to less steep interest rate cuts this year than other candidates. However, the Reuters poll showed that the majority of strategists still see the medium-term trend as being soft-dollar, and the market remains net-short on the dollar.
For the euro, a Reuters poll projected EUR/USD to stabilize near $1.18 in the short term, then trend higher over the 6–12-month horizon (median around $1.20–$1.21). In the spot market, the euro last stood at $1.1811.
Meanwhile, the yen remains at the center of volatility due to political factors. USD/JPY rose and the yen weakened ahead of this weekend's Japanese elections—Reuters noted the yen fell to around 156.80 per dollar (weakening 0.68% on the day), amid speculation that a victory by Prime Minister Sanae Takaichi's camp could push a spending/tax cut agenda that would pressure the yen.
Source: Newsmaker.id
