Well, it looks like the dollar is taking a stand by putting its foot down to stem the rout from last week. USD/JPY is leading the trend this week in a reversal back above 140.00 now. I said on Monday here that if the dollar falls further, the pair will need to provide the key to unlock this move. Unfortunately, the USD/JPY does not appear to have given this approval.
Other dollar pairs are also following suit but to varying degrees. EUR/USD consolidated gains above 1.1200 before dropping to 1.1130-40 now. The pair is in a 10 pips range today, and that is quite the snooze. Meanwhile, GBP/USD slipped back below 1.2900 after weaker UK CPI data this week.
We seem to be seeing price action becoming more cautious and hesitant, as we head towards key central bank policy decisions next week. The Fed, the European Central Bank, and the Bank of Japan are all on the agenda, and that would make for an interesting end to July trading at least.
For now, it looks like the dollar may consolidate as the selling from last week is on pause. It’s time to re-evaluate these trades again and compare them to next week’s prospects.
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