Member of the Federal Reserve Board of Governors assesses that further interest rate hikes are still necessary to curb the pace of US inflation.

Friday's release of Nonfarm Payrolls data hit the US dollar against other major currencies. However, a statement from a Fed official today slowed its decline. The US Dollar Index (DXY) was sideways in the range of 102.10 in the New York trading session (August 7th), while the greenback exhibited varied daily performance in the forex market.

us dollar

Some market participants believe the US dollar decline last weekend went too far. This is because not all US labor market data worsened. While the Nonfarm Payroll was disappointing, the unemployment rate and wage growth remained strong. These considerations prevented further selling actions on the greenback.

Helen Given, an FX trader at Monex USA, mentioned that they are presently observing the correction in the dollar due to the market's relatively excessive response to Friday's Nonfarm Payroll figure.

She was quoted by Reuters stating that despite the US labor market data falling short of expectations, the figures aren't enough to explain the decline of the US dollar on Friday. She emphasized that the overall economic outlook remains strong.

Michele Bowman, a Federal Reserve Board of Governors member, also assessed that the US economic conditions are still quite sound.

Bowman stated her support for the interest rate hike last month. Her rationale was that inflation remains too high while job growth and other economic activity indicators continue to progress moderately. Furthermore, she feels the need for another interest rate increase.

Bowman said although the U.S. has made "progress in lowering inflation over the past year," the inflation rate remains above the Federal Open Market Committee's (FOMC) target of 2 percent.

Market participants this week are anticipating the release of US inflation data on Thursday. This data could serve as additional reference amidst the speculations regarding whether the Fed will raise interest rates again or if the July rate hike was the final one in this current cycle.