On Monday (August 10), the US dollar index fluctuated by only 1.11% during the day, with a high and low range of 32 points: a low of around 99.40 to a high of 99.72. This range is typical of narrow fluctuations. Market sentiment was cautious: without any major data or news to stimulate the market, funds chose to wait and see, and there was no clear direction for speculation. The US July jobs report released last Friday became the core trigger for the current weakening of the US dollar, completely shattering the market's previous perception of the resilience of the US labor market. Data showed that US non-farm payrolls decreased by 23,000 in July, while the combined downward revisions of May and June non-farm payrolls by 103,000 significantly weakened the growth momentum of the job market. Although the unemployment rate remained unchanged at 4.1% that month, the labor force participation rate fell to 61.4%. The stability of the unemployment rate was not due to an increase in jobs, but rather to a large number of workers leaving the market, further confirming the continued slowdown in the growth of the US job market. Regarding wages, the average hourly wage increased by 3.2% year-on-year in July, with overall wage inflation pressure easing marginally. The combination of these multiple data points fully released signals of a weakening US economy, significantly reducing market bets on further interest rate hikes by the Federal Reserve. Following the release of the jobs data, the upcoming US July CPI data, to be released this week, has become a core indicator for the global foreign exchange market, directly influencing the Federal Reserve's subsequent monetary policy path and the short-term trend of the US dollar. The market generally expects the US July core CPI to rise by 0.2% month-on-month and 2.5% year-on-year. The overall CPI this month is expected to rise by 0.1% month-on-month, slightly lower than the market consensus forecast of 0.2%, while the core CPI is expected to be in line with market expectations. If the inflation data shows a "weak" trend, it will further confirm the cooling trend of US inflation, and the Federal Reserve will likely choose to maintain the current interest rate and continue its loose monetary policy stance. Conversely, if the inflation data rebounds more than expected, especially if inflation in the energy sector rises again, it will reshape market expectations for interest rate hikes, providing temporary support for the weak dollar. From the previous market pricing, even though the non-farm payroll data triggered a round of dovish repricing, the market still retains some bets on subsequent Fed rate hikes, with rate hike expectations for September, December, and April of the following year priced in by 11 basis points, 28 basis points, and 40 basis points, respectively. This means that there is still ample room for the Fed to dovishly repric. If the CPI data confirms the downward trend of inflation, the market will further digest the expectation of a cooling rate hike, and the dollar will likely face a new round of downward pressure. Looking back at the key market catalysts since August, the market needs to withstand five key tests before the September FOMC meeting: two rounds of employment data, two rounds of CPI data, and the Jackson Hole symposium. The first round of employment data has already released a clear dovish signal, which is bearish for the US dollar. This round of CPI data may continue this trend, consolidating the weak dollar. Technical Analysis (US Dollar Index Daily Chart Source: EasyForex) From a technical perspective, the US Dollar Index (DXY) remains fragile in the short term, with downside risks not yet fully cleared. The US Dollar Index was quoted at 99.69 during the session, temporarily holding above the key support level of 99.42 and the long-term upward trend line after a significant sell-off, indicating a slowdown in the short-term decline. However, the price continues to trade below the 50-day and 100-day exponential moving averages, located at 100.33 and 99.91 respectively, exerting sustained pressure on the index. The overall short-term trend remains weak. Short-term market signals show that the candlestick bodies near the support level are gradually narrowing, indicating a weakening of selling momentum, but no clear reversal signal has yet appeared. The Relative Strength Index (RSI) is currently in the low range of 37, approaching oversold territory, suggesting a potential technical rebound. Regarding resistance levels, the first resistance for the US dollar index is at 100.36, with further resistance at 100.82 and 101.62. If the trendline support holds, a short-term rebound is possible. However, a break below the key support level of 99.42 would open up further downside potential, with targets at 98.76 and 98.18. Overall, the cooling US job market has established a weak short-term tone for the dollar, leaving ample room for dovish repricing. This week's CPI data will be crucial in confirming the dollar's downward trend and driving a breakout for non-US currencies. Against the backdrop of divergent policies between the central banks of the US, Europe, and the UK, the overall bullish trend for the euro against the dollar and the pound against the dollar remains stable. As long as inflation data does not show an unexpected rebound, the dollar's weakness is likely to continue, and non-US currencies are expected to continue rising.