On Monday, the U.S. dollar declined against risk-sensitive assets—particularly the euro and the pound—after several Federal Reserve officials indicated they were prepared to consider an interest rate cut as early as September.

One of the most dovish voices was Federal Reserve Governor Lisa Cook, who called the July U.S. jobs report "concerning" and suggested it could mark a turning point for the U.S. economy. "These revisions are somewhat typical of turning points," Cook said Wednesday during a moderated discussion hosted by the Federal Reserve Bank of Boston.

Cook's remarks echoed across financial markets, prompting investors to reassess the outlook for the U.S. economy. Her emphasis on a possible turning point highlighted the Fed's growing concern about the durability of the current economic expansion. The labor market, which had long shown impressive resilience, has started to show signs of strain, prompting the central bank to proceed with greater caution. It cannot be ruled out that the Fed may be forced to adjust its strategy toward a more accommodative monetary stance to prevent further deterioration—an unfavorable development for the U.S. dollar. A rate cut may become necessary to support economic growth and encourage hiring, despite lingering inflationary risks.

Data released last week indicated a sharp decline in labor market activity in recent months. In July, employers added only 73,000 jobs—far below expectations—while gains for the previous two months were revised down by nearly 260,000. The unemployment rate rose to 4.2% from 4.1% in June.

Just two days before the report was released, the Fed had kept interest rates unchanged, citing concern over tariffs' impact on inflation. At that time, nearly all policymakers, except for two, had maintained a hawkish stance. Fed Chair Jerome Powell said labor market stability gave the central bank more time to gather data before making a rate adjustment. But as we can see, everything changed after the latest jobs report.

Cook also noted that the ongoing period of uncertainty facing businesses acts like a tax. She added that business leaders are spending a significant amount of time managing this uncertainty. "These are unrecoverable losses," she said.

Indeed, during periods of turbulence—when geopolitical risks intersect with technological shifts and changing consumer preferences—strategic decision-making becomes more difficult and resource-intensive. Companies are forced to spend time and money on scenario analysis, emergency planning, and continuous monitoring. This process effectively diverts resources away from innovation, market development, and improving operational efficiency. Moreover, prolonged uncertainty can negatively impact the investment climate. Companies may delay or cut back on investments due to fears of a worsening economic environment or regulatory changes. In turn, this slows economic growth and adds further risks to employment.

EUR/USD Technical Outlook Buyers now need to focus on reclaiming the 1.1690 level. Only then can they target a test of 1.1730. A move beyond that would open the way to 1.1760, though achieving this without support from major players may be difficult. The ultimate target remains the 1.1800 high. If the instrument declines, I expect significant buying interest to emerge only around 1.1655. If not, it may be prudent to wait for a retest of the 1.1610 low or to consider long positions from 1.1565.

GBP/USD Technical Outlook Pound buyers need to break through the nearest resistance at 1.3380. Only then can they aim for 1.3425, though breaching that level may prove challenging. The furthest upward target is the 1.3450 level. In the event of a decline, bears will attempt to regain control over 1.3330. If they succeed, a break below this range would significantly damage the bulls' positions and push GBP/USD down to the 1.3280 low, with potential for further losses toward 1.3250.