Investing.com – Fast Friday saw a weekly win as a report of a stronger jobs market cooled bets on a September rate cut by the Federal Reserve, but it’s unlikely to mark a material reversal in the dollar’s bumpy downtrend unless the Fed signals it is probably won’t make any cuts this year.

“To cause a major reversal of the recent USD weakening trend, the US CPI report for May and/or the FOMC meeting would have to cast significant doubt on whether the Fed will cut interest rates at all this year,” MUFG said in a note on Friday.

Ahead of next week’s two-day Fed meeting, hopes for a hawkish pause from the Fed have increased following “today’s strong NFP report from the U.S. on both job growth and wages,” MUFG added.

Friday’s report comes amid this week’s labor market update, including data showing that the number of job openings has fallen to its lowest level in three years.

According to Investing.com, the odds for a September rate dropped to 45% on Friday from 55% the day before

Earlier this year, the Fed signaled three rate cuts for this year, but persistent inflation and a forceful labor market suggest the economy doesn’t need any facilitate from multiple rate cuts.

“We expect the Fed’s updated projections to show an upward revision to the inflation outlook for this year, but not enough to prevent the Fed from continuing to signal that it plans to make multiple rate cuts in the second half of this year,” MUFG said.

Upcoming CPI inflation data for May, due on Wednesday, could also play a role in the Fed’s thinking and the dollar’s next move, Morgan Stanley said.

“We expect the U.S. dollar to decline if the May CPI surprises to the downside, leading the committee to leave its March projections for core PCE and the federal funds rate unchanged in September,” Morgan Stanley said.