Dollar Softens as Euro Climbs, Yen Recovers, and Fed Watch Looms

USD Daily Market Update & Outlook
Written By Óhran Ó Dubhthaigh

Quick Summary:

  • Dollar Index (DXY) down ~0.3% to 97.8 at 17:00 ET (TradingView).

  • EUR/USD higher, +42 pips to 1.1180 (Investing.com).

  • GBP/USD up ~36 pips to 1.3220 (Reuters).

  • USD/JPY down 28 pips to 144.9 (DailyFX).

  • Market focus: Fed policy signals and U.S. CPI due midweek.

Intro

The dollar softened today, slipping against the euro, pound, and yen as long-term Treasury yields briefly flirted with the 5% mark before easing. Traders shrugged off the quiet U.S. calendar and instead positioned ahead of this week’s inflation numbers and Fed commentary. It wasn’t a collapse—more of a slow step back. But the shift was clear: risk currencies gained modestly while the dollar’s shine dulled.

Major Currency Pairs

  • EUR/USD: Rose ~42 pips to 1.1180 by 17:00 ET, its highest in a week. Euro strength reflected bond market stability in the eurozone and a softer DXY (Investing.com, Reuters).

  • GBP/USD: Added ~36 pips to trade near 1.3220. Sterling’s move was modest, driven by USD weakness more than UK data (Reuters, ForexFactory).

  • USD/JPY: Dropped ~28 pips to 144.9. The yen found relief as U.S. yields pulled back, reversing part of last week’s dollar-driven surge (DailyFX, TradingView).

Macro Drivers

  • Treasury yields: 30-year yield touched 5% before slipping back under, pressuring the dollar (Reuters, Bloomberg).

  • Fed outlook: No speeches today; traders await midweek Fed remarks for policy tone (Fed.gov).

  • Economic releases: U.S. CPI due later this week; today’s calendar was light (ForexFactory).

Prediction & Outlook (Opinion)

In the next 24–48 hours, I expect the dollar to stay on the defensive. Euro momentum could stretch toward 1.1240 if DXY holds under 98. Yen gains may fade if yields rebound, but for now, the risk is skewed toward a softer USD. Traders should prepare for volatility around CPI and Fed speeches—quiet today, noisy tomorrow.

Practical Impact for Traders

  • EUR/USD: Eye 1.1240 resistance; break could extend euro gains.

  • GBP/USD: Likely rangebound unless U.S. yields spike.

  • USD/JPY: Sensitive to 30-year yield swings; key line at 145.5.

  • Short-term bias: Dollar mildly bearish into CPI.

FAQ

Q1: Why did the dollar weaken today?
Because Treasury yields eased after the 30-year briefly touched 5%, and no U.S. data offset the move (Reuters).

Q2: What’s the next big U.S. release?
CPI, scheduled midweek, is the next high-impact event (ForexFactory, Investing.com).

Q3: Could the yen rally last?
If yields stay tame, yes. But a yield rebound could quickly put USD/JPY back above 145.5 (DailyFX).

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Disclaimer: This information is for educational purposes only and is not investment advice.

Sources

- Reuters – Currencies & Bonds: https://www.reuters.com/markets/currencies/

- Investing.com – EUR/USD: https://www.investing.com/currencies/eur-usd

- TradingView – Dollar Index: https://www.tradingview.com/symbols/TVC-DXY/

- DailyFX – JPY Analysis: https://www.dailyfx.com/jpy

- ForexFactory – Economic Calendar: https://www.forexfactory.com/calendar

- Bloomberg – Bonds: https://www.bloomberg.com/markets/rates-bonds

- Federal Reserve – FOMC Calendar: https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Óhran Ó Dubhthaigh

Óhran covers the Economic Calendar & Events, delivering precise breakdowns of the data releases and policy moves that drive dollar markets. With a background in financial research and an eye for numbers, he specializes in distilling complex events — from inflation reports to central bank meetings — into actionable insights. His reporting emphasizes accuracy, clarity, and context, with sourcing from official outlets like Fed.gov, BLS, and Reuters.

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