The dollar held modest gains against major currencies on Monday, stabilizing after a sharp drop last week following Federal Reserve Chairman Jerome Powell’s remarks that increased expectations of an interest rate cut next month. The euro fell 0.18% to 1.1699 dollars, retreating from a four-week high of 1.174225 dollars reached on Friday. The British pound and Swiss franc each declined by 0.1%. Major institutions including Barclays, BNP Paribas, and Deutsche Bank expect a 25 basis point rate cut in September after Powell said on Friday that risks to the US labor market are rising, but inflation remains a threat. Sami Al Shaar, chief economist at Lombard Odier, said the dollar is likely to face pressure amid expectations of monetary easing and a slowing US economy, alongside ongoing concerns about the US financial situation.

Markets price an 87% chance of a quarter-point rate cut on September 17, up from about 70% before Powell’s speech, according to CME’s FedWatch tool. The dollar index, which measures the US currency against a basket of major currencies, has fallen more than 9.5% this year. The index rose 0.05% to 97.88 in the latest trade, while the euro is the main gainer with nearly a 13% rise this year. Al Shaar expects the euro to rise from 1.20 to 1.22 dollars over the next six to twelve months. Regardless of the Fed’s policy path, investors are likely to continue focusing on President Donald Trump’s attacks on Powell and other Fed policymakers, which have raised concerns about the central bank’s independence. Goldman Sachs analysts noted in a memo that renewed efforts to reshape the Fed board represent a potential challenge to longer-term maturities.