Analysts: A dovish signal from the Federal Reserve could trigger a new round of dollar sell-off.

FXEM analyst Abdelaziz Albogdady stated that while the US dollar has stabilized after falling to multi-year lows, it still faces continued downside risks. The dollar's weakness is primarily due to Trump's comments signaling tolerance for currency depreciation. Markets are also increasingly concerned that Trump might nominate a more dovish Federal Reserve chair, potentially implying looser monetary policy and reduced institutional independence. Coupled with widespread unease about domestic political risks in the US (especially the rising possibility of a government shutdown), the dollar remains under pressure. With the market largely pricing in the Fed holding rates steady, the focus has shifted entirely to forward guidance. Any dovish leanings could exacerbate downward pressure on the dollar and US Treasury yields. (Jinshi)