NEW YORK, February 11, 2026 – The U.S. dollar is on the defensive, sliding as weakening labor market data fuels speculation of interest rate cuts by the Federal Reserve. Gold prices are surging, nearing $5,100 as investors seek safe haven assets amid rising policy uncertainty.
Dollar Weakens on Rate Cut Bets
Investors are pricing in potential Fed easing as economic signals cool.
- The U.S. dollar index is down for four consecutive sessions.
- Gold is approaching $5,100, boosted by risk appetite and policy uncertainty.
- The USD/JPY pair is testing support levels ahead of the jobs report.
- Expectations for two rate cuts by the Federal Reserve are growing.
The foreign exchange markets are reacting negatively to concerns about the health of the U.S. labor market, coupled with a generally positive risk appetite. Global equity markets remain near record levels, benefiting commodity currencies and cyclical currencies. Demand for the dollar is fading, which is bolstering appetite for precious metals, with gold climbing to the near $5,100 area.
Yesterday’s U.S. retail sales data did little to support the dollar, as both headline and core retail sales figures missed expectations, registering a print of zero. Despite this miss and a cooling labor market, other U.S. macroeconomic indicators suggest that economic growth is still reasonably resilient. However, markets are largely convinced that around two rate cuts are on the horizon, pointing towards a softer dollar, though not necessarily a dramatic collapse, given the strength of U.S. equity markets.
What to Expect From the Jobs Report
The nonfarm payrolls report, delayed from its usual release, is expected to show 66,000 jobs created last month, an increase from the 50,000 jobs added in December. However, given the weak pre-NFP leading indicators released last week, a miss is possible. Some disappointment is already priced in, so a softer-than-expected number may not trigger a significant dollar sell-off.
Conversely, a slight beat could amplify the dollar’s upside reaction, potentially boosting the USD/JPY pair. The unemployment rate is expected to remain unchanged at 4.4%, while average hourly earnings are projected to climb by another 0.3% month-on-month.
Yen Gains Ground
The USD/JPY pair is showing relative strength for a change, drifting lower as the yen finds support following the empowerment of the Liberal Democratic Party (LDP) government in Japan. The USD/JPY has fallen for three consecutive days, though it remains within what could be considered a bullish trend. This could encourage dip-buying, especially if the jobs report isn’t too disappointing.
Key resistance levels to watch are 154.50-155.00. Breaking through this zone could lead to a test of 155.50/5. On the downside, 153.00 represents short-term support, but the trend line near 152.00 is a more significant level for bulls to defend. A breach of that level could bring 150.00 into focus.
Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.
