The USD is falling against major currencies. The EURUSD has gone above recent swing highs from last Wednesday and July 11. It’s also above the 61.8% retracement level from the July drop. The important range is between 1.1716 and 1.1725, which offers short-term support. If it keeps rising, it could aim for 1.1753 to 1.1769, possibly reaching 1.1808 and the 2025 high of 1.1830. The GBPUSD has returned to a swing area between 1.3505 and 1.3514. Recent highs have stalled here, as this area includes several swing lows and highs since early June. If it breaks above this, attention will shift to the 38.2% retracement at 1.3526 from July’s initial high. Buyers must surpass this retracement to regain momentum.

USDJPY Movement

The USDJPY has fallen below the 38.2% retracement from the climb starting July 1. It’s now around 146.704 and is in a swing range between 145.92 and 146.288. The midpoint of this July increase, at the 50% level, is around 146.094, which is significant. This analysis suggests ongoing weakness for the dollar, so using options strategies that benefit from a declining dollar seems wise. Recent data shows U.S. inflation cooling to 3.3%, raising expectations for a Federal Reserve rate cut. Futures markets now show a nearly 70% chance of a cut by September. This backdrop supports technical breakdowns across major currency pairs. We see a chance for the euro, especially since prices remain above the crucial 1.1725 level. Unlike the Fed, European Central Bank officials are staying hawkish due to sticky core inflation over their 2% target. This difference in policy should help push toward the yearly high of 1.1830.

Sterling and Yen Perspective

For the sterling, a clear break above the 1.3526 retracement level would be a strong signal to buy call options or sell bearish credit spreads. The Bank of England faces challenges as wage growth stays near 6%, making rate reductions complicated. Historically, labor market strength like this has supported the currency. The yen’s drop is notable as it breaks below the 146.70 level, indicating increased momentum. This trend is reflected in market positioning, as reported by the CFTC. Large speculators have cut their net-short yen positions for the fourth week in a row. This suggests a broader shift in sentiment that might see the pair approach the 50% midpoint near 146.09. Create your live VT Markets account and start trading now.

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