By Terence Hove

The US Dollar started the week on a softer tone. Traders could remain cautious ahead of the Federal Reserve’s meeting this week and could also focus on any trade developments.

While Beijing acknowledged Washington’s outreach for trade negotiations, it reiterated that all unilateral tariffs must be lifted before talks can proceed. The lack of a clear timeline could keep sentiment on edge as economic risks remain.

Meanwhile, US Treasury yields stabilized to a certain extent with the 10-year note hovering near 4.3% on Monday. Friday’s stronger-than-expected jobs report reduced the expectations of an imminent rate cut, prompting markets to push back bets on the first rate reduction to July.

Looking ahead, all eyes are now on today’s ISM Services PMI and Wednesday’s Federal Reserve decision. While no changes in interest rates are expected, the Fed’s guidance could affect the market as traders look for clues on how policymakers interpret the evolving trade and inflation landscape. Dovish signs are likely to increase selling pressure, while a cautious approach could temporarily stabilise the dollar.

Hove is Financial Markets Strategist Consultant to Exness