💹 Dollar Weakness Pauses, Market Searching for Direction
📌 Recap: End of Last Week & Tokyo Session
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Powell’s Jackson Hole speech revived rate-cut expectations, driving dollar weakness late last week.
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Tokyo opening: USD/JPY briefly climbed to 147.53, but fell back to the low-147s in a corrective move.
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U.S. equities supported risk-on yen selling, but follow-through was limited.
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With UK markets closed for Summer Bank Holiday, liquidity remained thin and direction uncertain.
📊 Timeline of Rate-Cut Expectations Since July
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Aug 1 – U.S. NFP: Weak → rate-cut expectations rise
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Aug 12 – CPI: Below forecast → expectations accelerate
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Aug 14 – PPI: Strong → rate-cut expectations temporarily ease
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Aug 21 – PMI: Improvement → mild pullback in cut bets
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Aug 23 – Powell: Dovish tilt reinforced cut outlook
📌 Markets now see a 25bp cut at September FOMC as base case, with two cuts priced in by year-end.
💱 FX Moves
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USD/JPY: Stable around low-147s
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EUR/USD: Briefly dipped below 1.1700 but quickly recovered → firm tone
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GBP/USD: Limited downside below 1.3500 → solid support
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EUR/JPY: Trading steady around 172
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GBP/JPY: Consolidating near 199 → potential test of 200
🌍 Europe: German Ifo Sentiment
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Slightly above expectations in August, but market impact muted.
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EUR/USD & EUR/JPY little changed → reaction subdued.
📊 Range Table (Early Week Guidance)
| Pair | Current Level | Support | Resistance | Comment |
|---|---|---|---|---|
| USD/JPY | ~147.20 | 146.50 | 148.00 | Dollar weakness paused, topside capped; tied to U.S. yields. |
| EUR/USD | ~1.1680 | 1.1600 | 1.1740 | Stable around 1.17; upside break needs data catalyst. |
| GBP/USD | ~1.3470 | 1.3400 | 1.3550 | Battling 1.35 handle; weak UK data weighs. |
| EUR/JPY | ~172.20 | 171.50 | 173.00 | Range-bound; euro stable, yen selling provides support. |
| GBP/JPY | ~199.10 | 197.50 | 200.50 | Watching 200.00 test; break may be limited. |
✅ Summary
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USD/JPY: Stuck in low 147s; vulnerable to swings with U.S. yield shifts.
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EUR/USD: Firm but 1.1740 resistance remains tough; likely data-driven moves.
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GBP/JPY: Eyeing 200 test; UK data could decide direction.
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Cross-yen: Balance between structural yen selling and pre-event consolidation.
👉 Clearer directional moves likely after the U.S. PCE deflator later this week.
