The dollar index slipped to around 96.8 on Thursday, following a bout of heightened volatility in the previous session, and struggled to find firm support even as stronger-than-expected US jobs data reduced the likelihood of near-term Federal Reserve interest rate cuts. The greenback also stayed under pressure against the surging yen, amid renewed verbal intervention from Japanese authorities and growing optimism that Prime Minister Sanae Takaichi’s expansionary fiscal policies will strengthen domestic growth.
Data released on Wednesday showed that US payrolls increased by 130,000 in January, the largest monthly gain in more than a year, while the unemployment rate unexpectedly dropped to 4.3%. The figures signalled a stabilizing labor market at the start of 2026. This robust data pushed Treasury yields higher and reinforced Fed officials’ inclination to keep rates on hold for the time being, with markets now expecting the next rate cut in July rather than June.
