Insights 
VT 
Last week’s rapid dollar sell-off stabilised with a bounce on Friday. Expectations have shifted for the December FOMC meeting, with a 50% chance of a 25bp rate cut now priced in.
The Federal Reserve may prefer this pricing due to limited data. Wednesday’s FOMC minutes and Thursday’s September jobs report, expecting a 50k payroll gain and 4.3% unemployment, will likely influence the dollar’s direction.
Fed Speakers to Influence the Market
Numerous speeches by Federal Reserve officials are scheduled this week. Philip Jefferson’s upcoming speech might reinforce the recent message against hasty rate cuts, potentially supporting the dollar’s recent strength.
The dollar index might maintain its rebound, potentially moving towards the 99.50/65 area. The FXStreet Insights Team curates market analyses from experts and additional insights from various analysts.
It appears the dollar’s sell-off last week went too far, and Friday’s bounce was a necessary correction. We’ve seen market pricing for a December 10th Federal Reserve rate cut pull back to roughly a 50/50 probability, a level the Fed is likely more comfortable with. Recent data from late October 2025 showed Core PCE inflation holding firmer than expected at 3.1%, making the case for an immediate cut less compelling.
Expectations Around Jobs Report and Earnings
This week, we will get more clarity from the minutes of the late October FOMC meeting, which should reinforce the message that a December cut is not guaranteed. Fed speakers are also out in force, and we expect them to echo a patient approach, which should provide a floor for the dollar. This steady messaging is designed to prevent the market from getting ahead of itself on rate-cut expectations.
The major event will be Thursday’s jobs report, with consensus expecting a gain of 50,000 payrolls and the unemployment rate holding at 4.3%. After the more volatile job markets we saw through 2023 and 2024, a number like this is viewed as neutral, as it isn’t weak enough to force the Fed into action. We are also watching Wednesday’s Nvidia earnings as a key gauge of broader market risk sentiment.
For derivative traders, this outlook suggests considering strategies that benefit from a modest, short-term rise in the dollar. This could involve buying short-dated call options on the DXY or put options on pairs like EUR/USD, targeting a move towards the 99.50 to 99.65 area. Since the rally is expected to be limited, selling out-of-the-money call spreads could also be a way to capitalize on a capped upside.
