The dollar has shown signs of recovery following a significant sell-off in overnight trading. The currency’s value had declined sharply against major counterparts before finding support and beginning to climb back.

Analysts attribute the initial decline to a combination of factors, including profit-taking after recent gains and concerns about the U.S. trade deficit. However, the subsequent rebound suggests underlying strength in the dollar, possibly driven by expectations of further interest rate hikes by the Federal Reserve.

Market participants are now focused on upcoming economic data releases, which could provide further clues about the direction of the dollar. Key indicators to watch include inflation figures, employment reports, and retail sales data. These figures will be crucial in determining the Fed’s monetary policy stance and, consequently, the dollar’s trajectory.

The currency market remains volatile, and the dollar’s performance is likely to be influenced by a range of factors, including geopolitical events and changes in global risk appetite.