Financial experts from ING have discussed the current state of the US dollar, suggesting that it is rather in a downward consolidation phase than a significant decline.

The observation comes after the dollar has seen a keen 5% decline since early July. Market expectations include 100 basis points of rate cuts from the Federal Reserve by the end of the year, with the final interest rate set at 3.00%.

ING analysts believe that these expectations will create the foundation for stabilization of the dollar value without further significant decline or enhance.

The dollar’s ​​recent swings are seen as part of a broader downtrend, as evidenced by the contribution of traditionally lagging Asian currencies, including the Korean won.

It is worth noting that the options market is currently showing a preference for Korean won call options, something that has not been seen since 2007. This change could be due to either investors rebalancing their portfolios or Asian exporters engaging in past-due dollar hedging.

To see the dollar’s ​​bearish trend resume, ING suggests that further negative surprises in U.S. activity data will be needed. However, the current economic calendar, which highlights second-quarter GDP revisions and weekly jobless claims, may not provide such catalysts. Jobless claims have been consistently close to 235,000, and broad jobless losses have yet to materialize.

Federal Reserve Chairman Jerome Powell’s recent speech indicated some concerns about a rapid deterioration in the labor market, suggesting potential future increases in jobless claims. Despite this, ING expects the dollar index (DXY) to remain relatively stable in its current range. Analysts believe that only a move above the 101.60/65 threshold would indicate a shift beyond what is currently seen as bearish dollar consolidation.

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