📉 Dollar Selling Persists, But Lacks a Decisive Catalyst – All Eyes on ISM and Earnings

📉 Dollar Selling Persists, But Lacks a Decisive Catalyst – All Eyes on ISM and Earnings

💱 Dollar Weakness Continues in the Wake of Disappointing NFP

The sell-off triggered by Friday’s weak U.S. jobs report continues to ripple through the markets. During Tokyo trading hours, USD/JPY dropped as low as 146.62, reflecting ongoing bearish momentum.

However, the Dollar Index (DXY) is still holding above its 10-day moving average, suggesting that the broader dollar uptrend since July may not be completely broken yet. The market now faces a key question: Is this a true reversal, or just a short-term correction?

📉 Rate Cut Bets Accelerate, But Sentiment Remains Fluid

Expectations for a Fed rate cut in September have grown significantly, and the market is even starting to price in two or more cuts before year-end. Still, these are based on current sentiment, and upcoming economic data or remarks from Chair Powell could easily reshape the outlook.

💡 Bottom line: While the bearish dollar tone prevails, a more decisive trigger is still needed to confirm a deeper downtrend.

📅 Key Schedule for Today (August 5)

🗣 Fed Talk & Headlines: No scheduled speeches, but markets are sensitive to surprise comments via media interviews or reports.

💰 3-Year Treasury Auction ($58B): Yield outcomes may influence bond and FX markets.

📊 Key Earnings Today:

• Pfizer

• Caterpillar

• Amgen

• AMD

• Snap

• Super Micro Computer

💹 London Session: Risk-On Reversal Led by Yen Weakness

During the London session, a recovery in global stocks and U.S. futures fueled a risk-on mood, prompting yen selling and lifting USD/JPY back up to 147.77.

Other major yen crosses also rebounded:

Additionally, a Nikkei report that Japan’s Cabinet Office may lower its FY2025 GDP growth forecast weighed on the yen, contributing to renewed “Japan risk” sentiment.

📌 Summary | Directionless Until Next Major Catalyst

• Dollar selling triggered by NFP continues, but downside is limited for now.

• Technical support on DXY and yen weakness in European hours are buffering the move.

• Tonight’s ISM Services PMI and earnings reports could spark a reversal in dollar sentiment.

• Market remains at a crossroads between trend reversal and short-term correction.

🎯 Trading Strategy:
Watch for potential short-term rebound setups, especially around USD/JPY. Stay flexible and responsive to tonight’s ISM data for possible directional cues.