Dollar Retreats After Previous Gains; September Cut Still Priced In

The US dollar has given back a significant portion of its previous session's gains as traders remain firmly committed to pricing in a 25 basis point Federal Reserve rate cut for September. Despite attempts at a dollar recovery, market positioning reflects persistent dovish expectations that continue to cap any sustained USD strength. The retracement suggests that yesterday's dollar bounce was likely profit-taking rather than a fundamental shift in sentiment. Currency markets are demonstrating conviction in their Fed policy outlook, with futures markets maintaining high probability for September easing. This persistent pricing pressure is keeping the dollar on the defensive across major pairs. Technical indicators show the dollar index struggling to maintain momentum above key resistance levels. The market's unwavering focus on September rate cut expectations suggests any dollar rallies may face selling pressure until the Fed provides clearer guidance or economic data significantly shifts the narrative.