Dollar Weakness Amid Labor Data and Trade Policy Uncertainty

The dollar reached a five-week low on Monday as investors await pivotal U.S. labor market data that could guide expectations on the Federal Reserve's policy easing direction. The data, crucial for assessing economic health, follows U.S. inflation figures and court rulings against Trump-era tariffs, stirring market anticipation.

Market participants are closely watching for Friday's U.S. nonfarm payrolls report, along with job openings and private payroll data preceding it. These economic indicators are set to show whether the U.S. economy still outperforms, or if a softer labor market will continue to justify a weakened dollar.

Further complicating the economic landscape is the focus on U.S. trade policy and Fed independence, especially as the Trump administration seeks greater influence over monetary policy. Political risks in Europe, indicated by France's potential confidence vote defeat, may also ripple across global currencies.

(With inputs from agencies.)