USD Faces Extended Decline as MUFG Projects Further Weakness Post-Jackson Hole

MUFG analysts project continued USD weakness following Fed Chair Powell's dovish shift at Jackson Hole, suggesting conditions are set for September rate cuts. The bank's forex strategists see the DXY potentially testing 100.00 support in coming weeks, representing a further 1.5% decline from current levels around 101.40. Powell's acknowledgment of labor market cooling and confidence in inflation's path to 2% marked a definitive policy pivot. MUFG highlights that markets are now pricing in 100 basis points of cuts by year-end, up from 75bps pre-Jackson Hole. This repricing particularly benefits high-yielding EM currencies and commodity-linked majors. Technical analysis shows the dollar breaking key support levels across multiple pairs, with EUR/USD targeting 1.1200 and GBP/USD eyeing 1.3300. The bank warns that only significantly strong US data could halt this dollar downtrend, making the upcoming NFP report crucial for near-term direction.