Dollar faces crisis of confidence! Wall Street strategist says its long-term trend is weak.

Despite recording the largest monthly increase in three years in July, Wall Street's foreign exchange strategists remain firmly bearish on the US dollar, believing that its rebound momentum is unlikely to be sustained. In July, the US Dollar Index (DXY), which measures the performance of the US dollar against a basket of major currencies, rose by 3.2%, ending several months of consecutive declines. This was also the strongest month of performance since 2021. The market gradually adjusted to the Trump administration's tariff policies, while the US second-quarter GDP data showed steady performance, strengthening the short-term trend of the US dollar and reversing the double-digit decline before July. However, in the eyes of foreign exchange market professionals, the long-term trend of the US dollar still points to weakness. The latest release of weak employment data, questioning the independence of the Federal Reserve, and Trump's dismissal of Erika McEntarfer, the director of the US Bureau of Labor Statistics, have raised concerns in the market about the reliability of US economic data. Goldman Sachs' chief strategist for foreign exchange and emerging markets, Kamakshya Trivedi, admitted in a report, "This week our views on the US dollar have almost all been wrong, but the significant revisions to employment data should reconfigure the market's interpretation of the tariff impact." Data released last Friday showed a total downward revision of 258,000 jobs in May and June in the US, far exceeding market expectations. The next key point in time will be the nonfarm payroll report on September 5. Trivedi pointed out that not only are the data results themselves worth noting, but also the importance of deviations from expectations and changes in data collection methods. With the decline in initial survey response rates and layoffs at the Bureau of Labor Statistics, the outside world has been highly alert to the credibility of the agency's data. Now, Trump will appoint a new director, who is widely seen as a loyal supporter, so if the employment data released next month is too strong, it may trigger concerns in the market about manipulated data. Although a strong employment report may briefly boost the US dollar before its release, investors' doubts about the credibility of the data are prompting them to reduce their US dollar assets in the medium to long term. At the same time, the resignation of the Federal Reserve Board member, Coogle, has also attracted market attention. Trump has the opportunity to nominate again, with markets speculating that National Economic Council Director Hassett or former Fed Governor Walsh are possible candidates. Citi's foreign exchange strategist, Daniel Tobon, said, "Although this nomination may not necessarily be the next Federal Reserve chairman, if either Hassett or Walsh takes over, the market may quickly interpret this as the Fed leaning towards faster and larger rate cuts." He also pointed out that the impact of Coogle's resignation has not been fully priced in and reiterated the bearish stance on the US dollar, expecting the euro to rise to 1.20 against the dollar. Currently, the euro exchange rate is 1 euro to 1.16 US dollars. Barclays' chief currency strategist, Themistoklis Fiotakis, also believes that Coogle's departure "has opened a new window for short-term weakness in the US dollar," but he does not expect the US dollar to depreciate excessively within the year 2025. Whether it is Goldman Sachs or Barclays, both institutions are inclined to be bullish on the Japanese yen against the US dollar, believing that amid the current uncertain environment, the appeal of the yen as a safe-haven currency is stronger.