The U.S. dollar strengthened broadly this week, with the DXY index approaching its 2026 high near 101.59 as safe-haven demand built on Middle East tensions and fresh tariff headlines. EUR/USD eased to 1.1727 even as a hawkish ECB hold offered the euro some support, while GBP/USD slipped to 1.3466 after UK CPI cooled to 2.6%. USD/JPY climbed to 159.16 as the yen remained the weakest major, and AUD/USD held near 0.7081 despite a stronger-than-expected Australian jobs report. Traders now turn to today’s FOMC decision and next week’s nonfarm payrolls for the next directional cue.
EUR/USD Spot Rate: 1.1727
▼ -0.35% 🔵 Outlook: Neutral | Support: 1.1650 · Resistance: 1.1800
Week in Review
EUR/USD drifted lower this week as broad dollar strength outweighed a hawkish ECB hold that left rates unchanged. The euro found intermittent support ahead of the rate decision, but safe-haven dollar demand tied to Middle East tensions capped upside. The pair remains range-bound just under the 1.18 handle.
Key Drivers: Hawkish ECB rate hold · Broad dollar safe-haven demand · Middle East geopolitical risk premium
Forward Outlook
With the ECB on hold and the Fed decision due today, EUR/USD is likely to stay reactive to any shift in policy tone. A dovish Fed surprise could spark a rebound toward 1.18, while continued dollar strength risks a retest of the 1.16 area.
GBP/USD Spot Rate: 1.3466
▼ -0.60% 🔴 Outlook: Bearish | Support: 1.3300 · Resistance: 1.3600
Week in Review
Sterling underperformed after UK CPI cooled a tick more than expected to 2.6%, reinforcing expectations for BoE easing later this year. Combined with broad-based dollar strength, GBP/USD slipped from the mid-1.35s toward 1.3466. Volatility stayed elevated as traders repriced rate-cut odds.
Key Drivers: Softer-than-expected UK CPI at 2.6% · Repricing of BoE rate-cut expectations · Broad dollar strength
Forward Outlook
GBP/USD is vulnerable to further softness if incoming UK data confirms a cooling inflation trend, with 1.33 the next downside pivot. A hawkish Fed surprise would add to the pressure, while any dollar pullback could lift the pair back toward 1.36.
USD/JPY Spot Rate: 159.16
▲ +0.85% 🟢 Outlook: Bullish | Support: 157.00 · Resistance: 160.00
Week in Review
USD/JPY extended its climb as the yen remained the softest major currency despite elevated geopolitical risk, a role it typically plays as a haven. Dollar strength tied to tariff headlines and Middle East tensions pushed the pair further above the 158 handle toward 159.
Key Drivers: Persistent yen underperformance · Broad dollar strength · Reduced haven demand for JPY
Forward Outlook
A break above 159.50 opens the door to a retest of the 2026 high near 163.77, while any verbal intervention from Japanese officials could trigger a sharp pullback toward 157.
AUD/USD Spot Rate: 0.7081
▼ -0.40% 🔵 Outlook: Neutral | Support: 0.6980 · Resistance: 0.7150
Week in Review
AUD/USD held relatively firm on a stronger-than-expected Australian unemployment print, but broad dollar strength ultimately dragged the pair modestly lower on the week. The Aussie continues to trade in a tight band near the 0.71 handle.
Key Drivers: Stronger-than-expected Australian jobs data · Broad dollar strength · Risk sentiment tied to Middle East tensions
Forward Outlook
Firm domestic labor data should limit downside, but AUD/USD remains sensitive to swings in risk appetite and the dollar’s trajectory following this week’s Fed decision.
EUR/GBP Spot Rate: 0.8708
▲ +0.25% 🟢 Outlook: Bullish | Support: 0.8650 · Resistance: 0.8750
Week in Review
EUR/GBP edged higher as the euro’s relative resilience following a hawkish ECB hold contrasted with sterling’s slide after softer UK inflation data. The cross moved back above 0.87 for the first time in several sessions.
Key Drivers: Hawkish ECB hold supporting the euro · Softer UK CPI weighing on sterling · Diverging central bank rate-cut expectations
Forward Outlook
EUR/GBP could extend gains toward 0.875 if UK disinflation data continues to build a case for BoE cuts, though a hawkish Fed-driven dollar rally could dampen broader cross volatility.
⚠️ Risk Events — Next Week
| Event | Date | Impact | Affected |
|---|---|---|---|
| FOMC Interest Rate Decision | 2026-07-29 | high | USD, all majors |
| US Nonfarm Payrolls | 2026-08-07 | high | USD |
| US CPI | 2026-08-12 | high | USD |
Analyst Note
With the Fed decision landing today and nonfarm payrolls due August 7, currency markets face a compressed catalyst calendar that could quickly resolve the current dollar uptrend one way or the other. We would fade further USD strength only on confirmation of a dovish Fed pivot.
This report is for informational purposes only and does not constitute financial advice. Published by Elven Financial Research.
