We have recently made the case for the Dollar to stay ‘trapped’ in a situation where FX volatility fails to pick up, leaving room for carry trades to keep supporting high-yielders and weigh on funding currencies. The Greenback probably needs some compelling evidence against the soft-landing narrative in the coming days to break lower.

Today will be the first occasion to put that narrative to the test this week. The US manufacturing sector has been in contractionary territory since November 2022, and the consensus expectations for a mild rebound from 46 to 47 this month may not have major market implications. We think JOLTS job openings data have a greater potential to move investors’ sentiment today, with the consensus already positioned for a cool-off in the hiring market.