The Dollar made slight gains on Wednesday after hitting its lowest point of the year against the Euro as investors anticipated updates to US employment figures and a speech from Federal Reserve Chair Jerome Powell.

The single currency rose to $1.1132, its highest since December, due to increased expectations of Federal Reserve rate cuts, which led to a decline in US bond yields and put pressure on the Dollar. At the time of writing the Euro had fallen 0.1% to $1.1119 as the Dollar stabilised.

Some analysts have linked the drop in yields, which diminishes the appeal of US bonds and exerts pressure on the Dollar, to persistent economic worries and anxiety over the upcoming revision of US non-farm payrolls data, Reuters reports.

Later on Wednesday, the Bureau of Labor Statistics is set to release updated figures for the period from April 2023 to March 2024, based on tax data.

“With inflation slowly converging to target, financial markets are increasingly sensitive to recession concerns, and thus a downward revision of job numbers could bring about another risk-off episode,” stated Michiel Tukker, senior European rates strategist at ING.

The Dollar index, measuring the greenback against six rivals, fell overnight to its lowest since the end of December at 101.30, but last rose 0.12% to 101.51.

Sterling edged up to its highest since July last year on Wednesday at $1.3054, but at the time of writing, it was down 0.1% to $1.3019.

The shift in yields and the Dollar “was perhaps a function of thin summer trading,” said head of FX strategy at Rabobank, Jane Foley. “Clearly it does set us up for some risk if on Friday Fed Chair Powell isn't as dovish as the market is positioned for him to be.”

Furthermore, the Dollar experienced fluctuations against the Japanese Yen, initially dropping by 0.21% to 144.945 Yen before rebounding to trade 0.55% higher at 146.03 Yen.