On September 1, the US Dollar Index traded near 98.05, continuing its recent volatile pattern. Over the past month, the Dollar Index has accumulated approximately 2% in losses.

Examining the influencing factors, monetary policy shows the Federal Reserve's September rate cut probability has risen to 87% for a 25 basis point reduction. Statements from New York Fed President Williams and Governor Waller have reinforced rate cut expectations, weighing on the dollar. On the economic data front, second-quarter GDP revised annualized quarterly growth reached 3.3%, while July's core PCE price index also rose to 2.9%, presenting mixed signals. Politically, Trump's attempt to remove Fed Governor Cook has raised concerns about Federal Reserve independence, impacting dollar confidence. In foreign exchange markets, the dollar showed divergent performance against major currencies including the euro, yen, and Swiss franc, with overall weak performance.

Friday's forex markets saw the Dollar Index close at 97.85, down 0.02%; EUR/USD closed at 1.1686, up 0.03%; USD/JPY closed at 147.0418, up 0.07%; USD/CNH closed at 7.1223, up 0.03%.

**Basic Analysis of the Foreign Exchange Market**

Factors affecting the foreign exchange market include the following aspects:

1. Data-wise, the US July core PCE price index annual rate reached 2.9%, meeting expectations of 2.9% but above the previous 2.8%; US July personal spending monthly rate was 0.5%, meeting expectations of 0.5% and above the previous 0.3%; the US August University of Michigan Consumer Sentiment Index final value was 58.2, below expectations and the previous 58.6. Yesterday's US data generally met expectations, having minimal impact on dollar, gold, forex, and oil movements.

2. European Central Bank Governing Council member Rehn refuted some investors' views that further rate cuts are impossible in the coming months, emphasizing that inflation risks currently "tend to be downward." Rehn warned against "complacency" about price stability, despite annual inflation rates meeting the ECB's 2% medium-term target for the past two months. "We must pay attention to downward inflation risks, with energy prices declining, euro strengthening, and services inflation under control."

3. The Federal Reserve Board currently has 7 members, with Trump having appointed two of them. However, this week, he suggested the possibility of "moving Milan to Cook's position" and selecting another person to replace Kugler. This would completely break the Fed's "independent foundation," and Powell would become a "lame duck." Allianz Chief Economic Advisor Mohamed El-Erian recently warned that the Fed's independence is beginning to show "concerning cracks," and it may now be too late to salvage the situation.

4. The China Federation of Logistics and Purchasing and the National Bureau of Statistics Service Industry Survey Center announced China's Purchasing Managers' Index for August on August 31. From the non-manufacturing perspective, non-manufacturing expansion accelerated somewhat, with services sector sentiment significantly recovering, while construction industry business activity index declined due to weather factors. August's non-manufacturing business activity index was 50.3%, up 0.2 percentage points from the previous month, with non-manufacturing continuing to expand. Among these, the services business activity index was 50.5%, up 0.5 percentage points from the previous month, reaching a yearly high.

Overall, recent views suggest the Dollar Index continues volatile decline, strong bearish momentum in USD/CNH, and modest volatile rebounds in non-USD currencies.

The dollar weakened against the euro and Swiss franc, with the Dollar Index recording approximately 2% monthly decline in August as traders prepare for a September Fed rate cut. CME's FedWatch tool shows markets currently expect an 87% probability of Fed rate cuts, up from 63% a month ago.

For intraday short-term outlook, non-USD currencies may continue rising, and the Dollar Index may face continued pressure; for the current major cycle, USD exchange rate trends are adjusted to a bottom-seeking rebound approach, forming a medium to long-term bullish judgment.

**Technical Analysis of the Foreign Exchange Market**

**US Dollar Index** The Dollar Index rose from a low of 100.15 to a secondary high of 110.18, then began another pressured decline. Currently, overall prices have broken below and are operating under MA250, also breaking the 100 integer level, showing a clear bearish trend. Intraday short-term movements suggest watching for bearish volatile decline.

**EUR/USD** Euro against dollar prices fell from previous highs of 1.1214 all the way to new lows of 1.0177. Subsequently began building a base and rebounding, with EUR/USD currently operating entirely above the MA250 daily average, showing a clear bullish trend. Intraday short-term movements suggest watching for bullish volatile rebounds.

**USD/CNY** USD against CNY offshore rates have undergone multiple volatile movements, beginning another volatile rise from previous lows of 6.9651, currently breaking above and operating above the MA250 average; prices created new highs of 7.4287 on April 8, then showed clear pressured decline. Intraday short-term movements suggest watching for bearish volatile decline.

**USD/JPY** USD against JPY fell under pressure from highs of 161.9525 to 139.5795, then launched a secondary rebound, after probing secondary highs of 158.8763 again, continued pressured decline. Currently, overall prices operate below the MA250 average, maintaining continuous decline in the short term. Intraday short-term movements suggest watching for bearish volatile decline.

Risk Warning: The above data is for reference only, past performance does not predict future results! Investment carries risks, market entry requires caution.