The US dollar fell on Tuesday to near its lowest level in seven weeks, as investors awaited revisions to US data that may reveal the labor market is in worse shape than previously thought, boosting expectations that the Federal Reserve will move toward a larger interest rate cut.

The dollar fell 0.2% against the Japanese yen to 147.21 yen, while the British pound rose 0.1% to $1.3558. The euro retreated to $1.1752 after touching its strongest level since July 24.

Against a basket of major currencies, the dollar index dropped to 97.25, its lowest level since late July, ahead of the preliminary revisions to jobs data covering the period from April 2024 to March 2025.

Economists expect downward revisions of up to 800,000 jobs, which could suggest the Fed is lagging in achieving its full employment objective.

Market expectations have gradually increased regarding the Fed moving toward a bolder easing policy. Traders have fully priced in a 25-basis-point cut, while the probability of a larger 50-basis-point cut has risen to about 12%, according to the CME FedWatch tool.

Kenneth Brooks, Head of Corporate Research in FX and Rates at Socit Gnrale, said: Current market pricing reflects significant doubts about whether the Fed will actually deliver a 50-basis-point cut, but if the revisions are highly meaningful, they could provide justification for a bigger move.

In a related context, the Wall Street Journal, citing unnamed sources, reported that advisers to President Donald Trumps administration are preparing a report on what they consider deficiencies in the performance of the US Bureau of Labor Statistics, which may be published in the coming weeks.

The growing expectations of US monetary easing also contributed to pushing spot gold prices to a record high of $3,659.10 per ounce on Tuesday.

Among other currencies, the Norwegian krone rose about 0.2% against both the dollar and the euro, after the minority Labour Party government secured a second term on Monday.

Political developments, from Tokyo to Buenos Aires, remain in investors focus after the resignation of Japanese Prime Minister Shigeru Ishiba, the ouster of French Prime Minister Franois Bayrou, and the surprise dismissal of Indonesias finance minister in recent days.

Lee Hardman, Senior Currency Analyst at MUFG, said in a note: Although political uncertainty is an unfavorable development, we believe it is not sufficient on its own to weaken the euro.

The European Central Bank is scheduled to hold its monetary policy meeting on Thursday, with widespread expectations of leaving interest rates unchanged.

Economists were divided last month over the likelihood of further cuts by the bank, but the latest data showing inflation near the 2% target and unemployment at historic lows has shifted expectations.

In Indonesia, the rupiah fell 0.8% after the government dismissed its finance minister on Monday. Traders said Bank Indonesia intervened on Tuesday by buying long-term government bonds in an attempt to stabilize the market.