Barclays analysts say U.S. dollar selling will likely moderate during month-end portfolio rebalancing, as strong economic data offsets political rate-cut pressure on Powell.
Key Takeaways
Dollar sell-off seen as mild during month-end rebalancing.
High core inflation and resilient U.S. economy supported the greenback in early July.
Trump’s pressure on Powell for rate cuts weighed on the dollar’s momentum.
Dollar Outlook Into Month-End
According to Jinshi Data, Barclays analysts expect U.S. dollar selling pressure to moderate at the end of July as portfolio managers rebalance their holdings.
In the first half of July, the dollar gained support from:
High core inflation readings
Strong economic activity data
A resilient U.S. labor market
These factors provided fundamental backing for the greenback.
Political Pressure vs. Economic Support
Despite the dollar’s early strength, President Trump’s pressure on Fed Chair Jerome Powell to cut rates has offset some gains.
Barclays noted that the positive momentum in U.S. equities has persisted, while U.S. bonds underperformed — a key metric the bank uses to assess potential investor demand for hedging currency risk.