Investing.com – The U.S. dollar fell slightly on Monday and last week’s jobs report pointed to another Fed rate cut later this month, but losses were modest amid renewed uncertainty in the Middle East.

At 0400 ET (0900 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was trading 0.1% lower at 105,550.

The dollar rally looks tired

The dollar’s rally following Donald Trump’s victory in the US presidential election is starting to look a bit depressing as the year draws to a close, with the Federal Reserve widely expected to cut interest rates again next week, even as employment growth rebounds. USA. November.

“Most of the US dollar’s positive impact is in price – from strong US data to trade and fiscal risks – and there is quite a long ride in dollar positioning,” analysts at Morgan Stanley (NYSE:), she said in a note.

However, it has only fallen less than 0.5% over the past week as it maintains safe-haven support, especially given heightened geopolitical tensions.

Rebel forces in Syria have overthrown President Bashar al-Assad, taking control of the capital Damascus, while the Middle East remains in turmoil and the war between Ukraine and Russia continues to rage.

Add to this political instability in South Korea, where the country is widely seen as a pillar of the East Asian economy, and it is no surprise that the American currency still has supporters.

“There appears to be no reason to reduce long dollar positions at this time, and after two weeks of consolidation, we consider it more likely that the dollar will return to a bullish trend,” ING analysts said in a note.

U.S. data for November will be released on Wednesday and could provide more information about the trajectory of Federal Reserve interest rates.

The euro awaits the last ECB meeting

In Europe, there were increases to 1.0579, and investors await the latest decision of the European Central Bank on interest rates on Thursday, which is the last political meeting this year.

The ECB widely agrees to another 25 basis point rate cut, which will be the fourth such cut this year.

Inflation in the euro area rose in November but still appears to be heading towards the ECB’s 2% target, with some signs of easing wage pressure.

Since the ECB last met in October, tariff risks for Europe have increased following Trump’s election victory; France and Germany are struggling with political turmoil; economic activity fell sharply and the euro weakened.

“There certainly seems to be little reason for the ECB to be happy right now, even though the hard data is performing better than expected,” ING said.

quotes rose 0.3% to 1.2776, with sterling performing quite well despite attempts to cope with inflation proving stubbornly high.

in the UK rose by 2.3% in the 12 months to October, meaning inflation is back above the Bank of England’s target.

Britain’s central bank cut interest rates in November for the second time in 2024 and appears likely to ease monetary policy more slowly than its main rivals in 2025.

Will the BOJ escalate next week?

In Asia, it gained 0.3% to 150.44 after revised data showed Japan’s economy grew slightly more than expected in the third quarter. However, the reading was much lower than the previous quarter’s growth.

After Monday’s economic growth reading, investors remain divided on whether interest rate increases will be taken next week.

rose 0.1% to 7.2748 after data showed China contracted more than expected in November despite recent stimulus efforts. Producer price inflation also remained low in November.

This week, attention will turn to China’s annual Central Economic Work Conference for guidance on more stimulus measures from the country’s central bank.

rose 0.9% to 0.6444 ahead of Tuesday’s Reserve Bank interest rate decision. The Council is expected to leave interest rates unchanged, but may ease its hawkish stance amid signs of economic weakening in Australia.

rose 0.5% to 1,431.49, hovering near a two-year high as South Korea’s political crisis escalates after prosecutors on Sunday opened an investigation into President Yoon Suk Yeol over his failed bid imposing martial law in the country last week.

Yoon survived an impeachment vote in the opposition-controlled parliament on Saturday, but the head of his own party said Yoon would be sidelined before he ultimately resigned.