📉 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)
| Event | Description | Market Estimate | Impact |
|---|---|---|---|
| 🇺🇸 U.S. Trade Balance (Jun) | Monthly deficit | — | Likely limited FX impact |
| 🇺🇸 ISM Services PMI (Jul) | Service-sector outlook | 51.5 (prev. 50.8) | Upside surprise may support USD |
🗣 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:
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Pfizer
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Caterpillar
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Amgen
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AMD
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Snap
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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:
| Currency Pair | Approx. Price |
|---|---|
| EUR/JPY | 170.51 |
| GBP/JPY | 196.36 |
| AUD/JPY | 95.41 |
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
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Dollar selling triggered by NFP continues, but downside is limited for now.
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Technical support on DXY and yen weakness in European hours are buffering the move.
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Tonight’s ISM Services PMI and earnings reports could spark a reversal in dollar sentiment.
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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.
