Forex Today: Dollar sinks on chances of negative fed funds rates

FXStreet Team FXStreet

What you need to know on Friday, May 8th:

The US will release the April Nonfarm Payroll report this Friday, which may result in majors holding on to ranges throughout the previous sessions.

The greenback started the day with a strong footing, but ended up losing ground against all of its major rivals amid mounting speculation fed funds rate would fall into negative territory early 2021. Yields gave un Thursday’s gains and returned to the lower end of their weekly range. Wall Street closing in the green added pressure on the dollar.

The common currency was once again the worst performer. EUR/USD enters Friday hovering around the 1.0800 level.

The BOE left its monetary policy unchanged, although 2 MPC members voted to increase the APP. Governor Bailey opened doors for further stimulus.GBP/USD ended the day little changed on the upside, mostly due to the broad dollar’s weakness.

Gold soared to $1,720, amid plummeting US Treasury yields. The yield on the benchmark 10-year Treasury note fell 10 basis points, amid dismal US employment data.

Crude oil prices trimmed intraday gains ahead of the close after reaching fresh weekly highs. The early advance came as a result of increasing demand from China, boosting hopes demand will continue to increase.

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FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD looks inconclusive near 1.1420

EUR/USD trades in a tight range in the low 1.1400s on Tuesday, struggling to gain momentum amid an equally absence of clear direction in the US Dollar (USD). Uncertainty surrounding the US-Iran conflict is capping the pair’s upside, while traders avoid taking significant positions ahead of Thursday’s ECB gathering.

Middle East crisis intensifies, Gold up

Gold gains ground on Tuesday, reversing Monday’s pessimism and advancing toward the $4,100 mark per troy ounce. Nevertheless, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP extends recovery as on-chain activity grows

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.