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Dollar steadies after July payroll miss as CPI nears

TD Securities says EUR/USD may struggle to clear 1.16 unless next week’s US CPI is benign, while it expects the Fed to hold rates unchanged through 2026 and 2027.

Reported · Written up by our desk · Major Pairs

TD Securities strategists said the US dollar weakened after a disappointing July payrolls report, but they see limited further downside against G10 currencies unless softer US inflation reduces expectations for Federal Reserve rate hikes.

The firm highlighted that EUR/USD could find it difficult to break above 1.16 without a favorable CPI print, while USD losses could still extend against some emerging market currencies, even as the broader dollar outlook remains more supported versus G10.

Ahead of CPI next week, the strategists pointed to expectations for core inflation of 0.2% month over month and headline CPI of 0.15% month over month, arguing that such readings could further move markets toward pricing out hikes.

TD Securities also maintained that markets have already reflected a meaningful portion of the recent rate rise in Fed pricing, and it continues to expect the Fed to keep rates unchanged through 2026 and 2027.

Latest closeEUR/USD 1.152 ▼0.3%

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