USD weakens as markets await NFP data amid Fed rate cut expectations

The US dollar remains under pressure across major pairs as traders position ahead of Friday's crucial Non-Farm Payrolls report, with markets firmly pricing in a 25 basis point Federal Reserve rate cut in September. Recent weak US labor market indicators have intensified concerns about economic slowdown, pushing the dollar index down 0.2% in early trading. Market sentiment reflects growing conviction that the Fed will begin its easing cycle this month, with CME FedWatch tool showing over 70% probability of a September cut. Asian and European currencies have gained ground against the greenback, with EUR/USD testing 1.1100 resistance and GBP/USD holding above 1.3150. The upcoming NFP report is expected to show job growth of 165,000, down from 187,000 previously, with any significant miss likely to accelerate dollar weakness. Technical analysis shows the DXY approaching key support at 101.50, with a break below potentially triggering further declines toward the 101.00 psychological level.