The trading session has started slowly, with major currencies showing little change in a calm risk environment. Traders are trying to make back losses from last Friday, caused by disappointing US ISM services PMI data, which has led to a gradual decline of the dollar. Today’s changes in currency values are small, continuing the trend of a weaker dollar after last week’s poor job data. Most dollar pairs are leaning towards selling the dollar, except for USD/CHF, which is affected by Swiss tariffs.

Currency Movements

EUR/USD is up 0.6% this week, maintaining its position above key hourly moving averages (100-hour at 1.1607, 200-hour at 1.1552). GBP/USD has increased by 1.3% this week and is also above its important hourly averages (100-hour at 1.3337, 200-hour at 1.3307). On the other hand, USD/CHF is up 0.5%, positioned between its key averages (100-hour at 0.8073, 200-hour at 0.8082). AUD/USD and NZD/USD have risen by 1.0% and 0.9%, respectively, also above their key hourly averages. The trend against the dollar is likely to continue until the US CPI report is released, a key moment for those looking for a dollar rebound. The recent downturn for the dollar appears justified based on the latest data. The US economy added only 95,000 jobs in July 2025, which was much lower than expected and indicates a cooling labor market. This was worsened by the ISM services report dropping to 50.8, its lowest level in over a year. This situation leads us to believe it’s wise to position against the dollar as we approach next week. Derivative traders might think about buying call options on pairs like EUR/USD and AUD/USD to take advantage of potential upward movement with limited risk. The technical indicators support this, as most major pairs are holding above their key short-term moving averages.

Market Strategies

The current quiet market presents a chance, as volatility seems inexpensive. The Cboe FX Volatility Index (FXVIX) has dropped to 6.5, indicating that options may not be fully reflecting the potential excitement surrounding the upcoming CPI data. Buying straddles or strangles on EUR/USD could be a strategy to profit from significant movement in either direction during the event. This scenario reminds us of summer 2023 when weak inflation data led to a sharp drop in the dollar. This historical context tells us to be cautious of being on the wrong side if next week’s CPI data is soft. If the Core CPI for July misses the forecast of 0.3% month-over-month, it could speed up the current trend. While most dollar pairs appear weak, we need to be careful with USD/CHF because of the specific pressures from Swiss tariffs. Nonetheless, the major focus for all dollar pairs is the US inflation report coming next week. A number higher than expected poses a significant risk that could quickly change the current narrative of dollar selling. Create your live VT Markets account and start trading now.

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