The U.S. dollar traded within a narrow range on Wednesday as investors focused on President Donald Trump’s upcoming nomination to fill a vacancy on the Federal Reserve’s Board of Governors.

At 03:50 ET (07:50 GMT), the U.S. Dollar Index, which measures the greenback against six major currencies, slipped 0.1% to 98.527. Trading remained subdued following the currency’s sharpest one-day drop in nearly four months last Friday, triggered by a weaker-than-expected U.S. jobs report.

Fed Policy in Focus

The dollar continues to struggle after last week’s disappointing labor data. Adding to the cautious sentiment, Tuesday’s figures showed U.S. services sector activity stalled in July, even as input costs rose at the fastest pace in nearly three years, highlighting the impact of tariffs on the economy.

Markets are pricing in a 90% probability of a Fed rate cut in September, with roughly 56 basis points of easing expected by year-end. With no major economic releases scheduled for Wednesday, investor attention remains firmly on Trump’s choice to replace outgoing Fed board member Adriana Kugler. The president has indicated a decision will come by week’s end.

“Trump’s recent criticism of the Bureau of Labor Statistics over payroll revisions has not significantly influenced markets,” ING analysts noted. “However, if the nominee echoes this stance, it could raise concerns about a potential disconnect between Fed policy and official data—a scenario we view as negative for the dollar.”

Sterling Awaits BoE Decision

In Europe, EUR/USD inched up to 1.1576, despite data showing German industrial orders fell 1% in June, marking a second consecutive monthly decline amid weak foreign demand. Analysts had expected a 1% increase. Later in the session, Eurozone retail sales data is due, with a 0.4% monthly rebound anticipated after a 0.7% decline in May.

“EUR/USD remains largely driven by dollar dynamics,” ING said, adding that upside potential is primarily linked to the Fed’s dovish repricing rather than eurozone fundamentals.

Meanwhile, GBP/USD edged down to 1.3295 as traders awaited Thursday’s Bank of England policy meeting. The central bank is expected to cut its benchmark rate to 4% from 4.25% and potentially deliver another cut later this year, even as inflation approaches double the 2% target in June.

Asian Markets and Emerging Currencies

USD/JPY hovered at 147.66 after weaker-than-expected wage growth data suggested easing inflationary pressures.

Elsewhere, AUD/USD climbed 0.4% to 0.6489, rebounding from recent one-month lows. USD/CNY added 0.1% to 7.1891 amid renewed tariff concerns linked to China’s purchase of Russian oil.

The Indian rupee strengthened slightly, with USD/INR falling 0.1% to 87.697 after hitting a record high above 88 earlier this week. The currency gained support after the Reserve Bank of India left rates unchanged at 5.50%, countering expectations of further cuts. So far in 2025, the RBI has lowered rates by a cumulative 1% to mitigate the impact of rising U.S. trade tariffs.