The US dollar had a bit of a mixed week, ending a little lower than where it started. But don't worry, it's still showing signs of strength! The market is a bit jumpy right now, with lots of things happening around the world. We've got the US and China still figuring out their trade deal, some interesting US job numbers and everyone's waiting to see what happens with inflation. Let's break down what's going on and what it might mean for FX market this week.
US and China: Still Talking, Still Uncertain
The US and China are still trying to work out a trade deal, but it's not easy. Every time there's a bit of news, the market reacts. The dollar got stronger at first when the US announced new tariffs on some Chinese goods, but then it weakened again when it seemed like maybe they were getting closer to a deal. This back and forth is making the market a bit nervous, and we might see more ups and downs in the dollar and other currencies until things settle down.
US Jobs: A Mixed Bag, But Still Pretty Good
The latest US job numbers were a bit confusing. The unemployment rate dropped to 4%, which is great news for the dollar buyers, but the number of new jobs created wasn't as high as everyone expected. However, wages went up more than expected, which means people have more money to spend. This could lead to higher inflation, which the Fed is keeping a close eye on. This week, we'll get more information about the job market with the JOLTs report, which will give us a better idea of how healthy the job market really is.
Inflation: The Big Question Mark
Inflation is a big deal for the Federal Reserve (Fed), and everyone's waiting to see what happens with the CPI data this week. Inflation has been pretty close to the Fed's 2% target, but it might be starting to go up. If inflation is higher than expected, it might take even longer for FED to deliver the rate cut. This delay in easing could make the dollar stronger. On the other side, If inflation disappoints, the market could react negatively, as the dollar's recent strength is heavily reliant on the expectation of a hawkish Fed.
Dollar's Next Move: Which Way Will It Go?
The US dollar index (DXY), which measures the dollar value against other currencies, ended the week a little lower. This shows how uncertain things are right now. The DXY had a good run earlier this year, but now it's taking a breather. What happens next depends a lot on the inflation data and whether the US and China can make a deal. If you look at the charts, the DXY is hanging around the 108.00 level. The DXY's ability to maintain support above the 108.00-107.50 zone will be crucial in deciding its near-term trajectory. A sustained break below this zone could signal a shift in momentum, while a hold above would keep the bullish outlook.
Euro and Pound: Facing Some Challenges
The euro and the pound are both having a bit of a tough time right now. The Eurozone economy is slowing down, and the European Central Bank (ECB) isn't likely to make any big changes to its policies anytime soon. This could make the euro weaker, especially against the dollar. The pound is also facing problems, with the UK economy slowing down and inflation still sticking around. This is called stagflation, and it's not a good situation. We'll get some important data about the UK economy this week, which will give us a better idea of what might happen to the pound.
From a technical perspective, both EUR/USD and GBP/USD are looking very bearish. The euro is getting close to the 1.0280 level, and if it breaks below, the market will likely target 1.0200 next. Meanwhile, the pound is already struggling to hold above the 1.2400 support level. A break below could send it down to 1.2250 or even 1.2100, especially if the UK economic data released this week is worse than expected.
Swiss Franc: The Wild Card
The Swiss franc is a bit of a wild card right now. Inflation in Switzerland is really low, which is worrying the Swiss National Bank (SNB). They've been trying to keep the franc from getting too strong, but it's not easy. They might even have to use negative interest rates, which would be a pretty big deal for the franc and other currencies.
Technically, USD/CHF has been trading in a range between 0.9000 and 0.9200 since the beginning of 2025. Within this range, there's a smaller zone with resistance at 0.9130 and support at 0.9050. If the price breaks above 0.9130, we could see the dollar continue higher toward the top of the trading zone, especially since the dollar is strong right now. There's also a chance that we could see a breakout above the whole range this week if the US inflation data is higher than expected. So, make sure you're keeping an eye on the economic calendar!
What to Watch This Week
This week is going to be another exciting one for the markets! Traders need to keep a close eye on the US-China trade talks, the US inflation data, and the UK GDP data. And don't forget about the Swiss franc! Things could change quickly, so it's important to stay informed and be ready to react.
Disclaimer: This article is just for informational purposes and shouldn't be taken as financial advice.
US and China: Still Talking, Still Uncertain
The US and China are still trying to work out a trade deal, but it's not easy. Every time there's a bit of news, the market reacts. The dollar got stronger at first when the US announced new tariffs on some Chinese goods, but then it weakened again when it seemed like maybe they were getting closer to a deal. This back and forth is making the market a bit nervous, and we might see more ups and downs in the dollar and other currencies until things settle down.
US Jobs: A Mixed Bag, But Still Pretty Good
The latest US job numbers were a bit confusing. The unemployment rate dropped to 4%, which is great news for the dollar buyers, but the number of new jobs created wasn't as high as everyone expected. However, wages went up more than expected, which means people have more money to spend. This could lead to higher inflation, which the Fed is keeping a close eye on. This week, we'll get more information about the job market with the JOLTs report, which will give us a better idea of how healthy the job market really is.
Inflation: The Big Question Mark
Inflation is a big deal for the Federal Reserve (Fed), and everyone's waiting to see what happens with the CPI data this week. Inflation has been pretty close to the Fed's 2% target, but it might be starting to go up. If inflation is higher than expected, it might take even longer for FED to deliver the rate cut. This delay in easing could make the dollar stronger. On the other side, If inflation disappoints, the market could react negatively, as the dollar's recent strength is heavily reliant on the expectation of a hawkish Fed.
Dollar's Next Move: Which Way Will It Go?
The US dollar index (DXY), which measures the dollar value against other currencies, ended the week a little lower. This shows how uncertain things are right now. The DXY had a good run earlier this year, but now it's taking a breather. What happens next depends a lot on the inflation data and whether the US and China can make a deal. If you look at the charts, the DXY is hanging around the 108.00 level. The DXY's ability to maintain support above the 108.00-107.50 zone will be crucial in deciding its near-term trajectory. A sustained break below this zone could signal a shift in momentum, while a hold above would keep the bullish outlook.
Euro and Pound: Facing Some Challenges
The euro and the pound are both having a bit of a tough time right now. The Eurozone economy is slowing down, and the European Central Bank (ECB) isn't likely to make any big changes to its policies anytime soon. This could make the euro weaker, especially against the dollar. The pound is also facing problems, with the UK economy slowing down and inflation still sticking around. This is called stagflation, and it's not a good situation. We'll get some important data about the UK economy this week, which will give us a better idea of what might happen to the pound.
From a technical perspective, both EUR/USD and GBP/USD are looking very bearish. The euro is getting close to the 1.0280 level, and if it breaks below, the market will likely target 1.0200 next. Meanwhile, the pound is already struggling to hold above the 1.2400 support level. A break below could send it down to 1.2250 or even 1.2100, especially if the UK economic data released this week is worse than expected.
Swiss Franc: The Wild Card
The Swiss franc is a bit of a wild card right now. Inflation in Switzerland is really low, which is worrying the Swiss National Bank (SNB). They've been trying to keep the franc from getting too strong, but it's not easy. They might even have to use negative interest rates, which would be a pretty big deal for the franc and other currencies.
Technically, USD/CHF has been trading in a range between 0.9000 and 0.9200 since the beginning of 2025. Within this range, there's a smaller zone with resistance at 0.9130 and support at 0.9050. If the price breaks above 0.9130, we could see the dollar continue higher toward the top of the trading zone, especially since the dollar is strong right now. There's also a chance that we could see a breakout above the whole range this week if the US inflation data is higher than expected. So, make sure you're keeping an eye on the economic calendar!
What to Watch This Week
This week is going to be another exciting one for the markets! Traders need to keep a close eye on the US-China trade talks, the US inflation data, and the UK GDP data. And don't forget about the Swiss franc! Things could change quickly, so it's important to stay informed and be ready to react.
Disclaimer: This article is just for informational purposes and shouldn't be taken as financial advice.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.