The U.S. dollar showed signs of slight recovery on Monday following a sharp decline triggered by Federal Reserve Chair Jerome Powell's dovish comments at the Jackson Hole symposium.
This pivot opened the possibility of an interest rate cut as early as the September meeting, leading to increased market bets on monetary easing.
The greenback had tumbled more than 1% against major currencies on Friday, reaching a four-week low versus the euro.
Early Asian trading saw the dollar edge up 0.2% to $1.1699 per euro, though it hovered near the recent low of $1.174225, unseen since late July.
Against sterling, it rose 0.1% to $1.3502 after a 0.8% drop in the previous session, while gaining 0.4% to 147.46 yen, partially reversing a 1% fall.
The risk-sensitive Australian dollar briefly hit a one-week high of $0.6523 before easing to $0.6484, following a 1.1% surge on Friday.
In his address to economists and policymakers, Powell highlighted rising downside risks to employment.
"Downside risks to employment are rising," he stated.
"And if those risks materialize, they can do so quickly."
This remarks cleared a low bar for dovishness after recent data had tempered expectations for cuts.
Traders now price in about 80-87% odds of a 25-basis-point reduction at the September 17 meeting, with cumulative cuts of around 48 basis points by year-end, per LSEG and CME data.
Major brokerages like Barclays, BNP Paribas, and Deutsche Bank anticipate the September cut, though Bank of America maintains a hold call, warning of potential policy errors if activity rebounds with inflation nearing 3%.
Goldman Sachs analysts noted that upcoming data will dictate the pace of any easing.
Key releases include the PCE deflator on Friday and August payrolls the following week.
The dollar's weakness is compounded by U.S. President Donald Trump's criticisms of Powell and Fed officials, sparking concerns over central bank independence.
Trump targeted Fed Governor Lisa Cook last week, stating on Friday that he would fire her if she does not resign over mortgage allegations in Michigan and Georgia.
He has repeatedly attacked Powell for not cutting rates this year and for issues like Federal Reserve building renovation overruns.
Elsewhere, the Chinese yuan strengthened to a one-month high against the weakening dollar.
The dollar edged up to 147.17 yen after Friday's slump, amid comments from Bank of Japan Governor Kazuo Ueda on spreading wage hikes and a tightening job market.
Ueda's remarks bolster expectations for the BOJ to resume rate hikes soon, following a pause after January's increase to assess impacts from Trump's tariffs.