Dollar Weakens Ahead of US Jobs, Retail Data and Fed Commentary

EUR/USD remains supported above the 1.1700 level at the start of the week, buoyed by continued softness in the US Dollar as investors position ahead of key US economic data.

Recent commentary from Federal Reserve officials has offered little clarity on the policy outlook. Fed Governor Stephen Miran struck a dovish tone, arguing that a faster pace of rate cuts would help bring policy closer to neutral and downplaying inflation risks from tariffs. In contrast, Boston Fed President Susan Collins delivered more neutral remarks, reiterating her support for the latest rate decision while noting that inflation risks have moderated.

Meanwhile, New York Fed President John Williams adopted a slightly hawkish stance, stating that monetary policy has shifted from “modestly restrictive” to near neutral. He emphasized that returning inflation to the 2% target remains a priority, even as labour market conditions show signs of cooling.

Market attention now turns to a heavy US data calendar on Tuesday, headlined by November’s Nonfarm Payrolls report and Retail Sales figures. Payroll growth is expected to remain subdued, with the unemployment rate seen holding steady. Retail Sales will be closely watched for signs of consumer resilience, particularly the control-group component used in GDP calculations.

In Europe, a recent Reuters poll suggests economists expect the European Central Bank to keep interest rates unchanged well into 2026, citing subdued inflation dynamics despite a relatively resilient economy.

Bitcoin declined on Tuesday, extending its recent pullback as investor appetite for risk-sensitive assets remained subdued ahead of key US economic data releases. Persistent uncertainty surrounding the macro outlook and weakness in global equities continued to weigh on sentiment across crypto markets.

The flagship cryptocurrency fell around 2% on Monday and early on Tuesday is hovering close to its weakest level in two weeks. Bitcoin also remains not far from the seven-month low recorded in late November, highlighting the depth of the recent correction.

Digital assets largely mirrored an extended downturn in global technology stocks, where profit-taking intensified amid renewed questions over artificial intelligence valuations. Losses in the tech sector reduced appetite for speculative investments, pressuring cryptocurrencies alongside other high-beta assets.

Bitcoin has steadily lost ground over the past week, finding limited support from the Federal Reserve’s recent interest rate cut and its relatively dovish policy outlook. Market participants have instead remained focused on upcoming US data that could influence the Fed’s next steps.

Attention is firmly on November’s US Nonfarm Payrolls report due later Tuesday, followed by Consumer Price Index inflation data later in the week.

Overall, Bitcoin and the broader crypto market have erased much of their gains for the year, slipping into negative territory after a prolonged downturn that began in mid-October and has yet to show convincing signs of stabilization.

Oil prices edged lower in Asian trading on Tuesday, pressured by ongoing expectations of a global supply surplus in 2026, while markets closely monitored developments in ceasefire negotiations between Russia and Ukraine.

Market attention remains focused on US-brokered ceasefire discussions between Russia and Ukraine, as any progress toward ending the conflict could pave the way for increased Russian oil exports.

US officials have signaled modest advances in negotiations, including indications that Kyiv may soften its stance on NATO membership in exchange for security guarantees from Washington. However, talks over territorial concessions—one of the most contentious issues—have yet to produce meaningful breakthroughs, and Moscow has offered limited signs that it is prepared to bring the nearly four-year conflict to an end.

A potential ceasefire could prompt the United States to ease some sanctions on Russian crude, a development that would likely add further barrels to an already well-supplied global market.

Beyond geopolitics, oil prices remain under pressure from a deteriorating supply-demand balance. Recent assessments from major industry bodies, including OPEC and the International Energy Agency, point to rising output and subdued demand growth in 2026, reinforcing expectations of a supply glut. These concerns have largely overshadowed fresh geopolitical risks elsewhere.

Traders are also looking ahead to key US economic data releases later this week, including nonfarm payrolls and consumer inflation figures, which could influence broader risk sentiment and energy demand expectations.

US equities closed modestly lower on Monday, led by renewed pressure on large-cap technology stocks as investors continued to rotate out of high-valuation names following last week’s shift toward cyclical sectors.

Selling in major technology stocks extended into a second week, with shares of Alphabet, Broadcom and Oracle among the notable laggards. The moves underscored a continuation of the rotation trade, as investors locked in profits from technology names that had benefited strongly from enthusiasm around artificial intelligence earlier in the year.

Market participants have increasingly shifted toward cyclical sectors viewed as more closely tied to economic growth, particularly as rising Treasury yields complicate the outlook for high-growth stocks.

Looking ahead, investors are bracing for a busy week of economic data that could influence interest rate expectations. Nonfarm payrolls data covering November, along with delayed October figures, are due Tuesday, followed by releases on business activity, weekly jobless claims and inflation later in the week. Attention has also turned to the future leadership of the Federal Reserve.

Investors will also monitor remarks from several Federal Reserve officials in the days ahead for additional policy clues. On Monday, New York Fed President John Williams said the benchmark interest rate is now close to a level that allows policymakers to pause and assess incoming economic data following last week’s rate cut.

A handful of corporate earnings reports, including results from Micron, Nike and Accenture, are also expected to shape sentiment as markets navigate shifting sector dynamics and evolving rate expectations.