Market bearish sentiment is deeply rooted; even strong non-farm payrolls can't prevent the dollar from remaining under pressure.

The recent performance of the US dollar remains weak, even though the US labor market shows signs of resilience. The dollar has not rebounded. According to Jin10, Corpay strategist Carl Shamota pointed out that this phenomenon indicates that bearish sentiment has become deeply rooted in the market, posing a direct challenge to the view that strong US fundamentals can boost the dollar.

Strong Non-Farm Payroll Data, but Market Reaction Is Tepid

The US labor market continues to demonstrate resilience, which should support the dollar’s movement. Strong non-farm payroll data typically influence Federal Reserve policy expectations—robust employment figures often suggest the Fed may maintain a prolonged period of policy stability. However, in reality, this “positive signal” has not effectively reversed the dollar’s downward trend.

Bearish Sentiment Has Become Mainstream, Fundamental Signals Are Ineffective

More notably, market pessimism about the dollar’s outlook has become deeply ingrained, causing traditional fundamental logic to fail. The strategist warned that views based on the strength of US economic fundamentals, which are bullish on the dollar, are facing severe challenges from market sentiment. This means that the current driving factors of the dollar’s movement have shifted from fundamentals to changes in market expectations.

Risk Assessment from a Historical Perspective

From a historical standpoint, the dollar’s current decline remains relatively moderate. But if bearish sentiment continues to dominate the market, the dollar could further decline. This also reminds investors that shifts in market sentiment will be a key factor in determining future dollar trends, rather than solely relying on the strength of economic data.