Forex & Currency Watch — 2026-07-08

Market Snapshot

Top Movers

• USD/JPY: +0.65% weekly — Sideways consolidation continues with upside bias intact; macro backdrop favors further strength unless Bank of Japan intervention arrives.

• EUR/USD: -0.25% daily — Pair slipped to 1.1428 during early European session as dollar rebound pressured euro; trading below trendline support at 1.1418 ahead of FOMC minutes.

• DXY (Dollar Index): +0.32% weekly — Bounced to 13-month highs near 101.00 on Fed hawkish rhetoric; Societe Generale forecasts DXY could reach 103.6 by year-end on policy divergence.

What Moved the Tape

• Fed Governor Christopher Waller's hawkish comments — On July 7, Waller reinforced the Fed's inflation-fighting commitment, underpinning dollar strength and keeping DXY bid above 100.80. USD pairs, especially EUR/USD and GBP/USD, faced headwinds as rate-hike expectations stabilized.

• Resilient US services data — Strong activity readings eased concerns about economic slowdown, supporting greenback positioning into FOMC minutes release. The data combination (soft labor market but sticky services) reinforced the Fed's data-dependent stance on rates.

• Policy and growth divergence narrative — Citi's Dan Tobon (head of G10 FX strategy) noted "We are dollar bulls in a world of dollar bears right now," citing ECB, BOJ, and BOE weakness vs. US resilience. This macro divergence remains the primary prop for DXY.

Central Bank Watch

• Federal Reserve (Fed): Governor Christopher Waller reiterated inflation remains a priority; hawkish tone on July 7 kept FOMC rate-cut bets at bay. FOMC meeting minutes due this week are critical for signaling Q3 policy path.

• European Central Bank (ECB): Softer growth outlook and wage moderation continue to weaken case for further rate hikes. EUR under pressure as market prices in extended pause in 2026.

• Bank of Japan (BOJ): BoJ officials remain cautious on yen intervention; USD/JPY strength persists absent coordinated FX moves. Macro backdrop continues to favor dollar over yen.

Emerging Markets & Asia FX

No fresh data available for this section from the past 24 hours on emerging-market moves.

Strategist Takes

• Societe Generale FX team: "The U.S. dollar rally may have further to run into the second half of 2026." DXY forecast reaches 103.6 by year-end, with EUR/USD projected to slide toward $1.11. Key driver: persistent Fed tightness vs. global easing bias.

• Citi's Dan Tobon (G10 FX Strategy): "We are dollar bulls in a world of dollar bears right now." Tobon sees greenback strength into Q3 2026, primarily vs. EUR, CAD, and GBP, despite headwinds from foreign investor hedging unwinds and political noise.

What to Watch Next

1. FOMC Meeting Minutes (July 8, 2026, after US market open) — Critical for USD direction; hawkish surprise could push DXY above 101.50, while dovish surprise could test 100.50. Most sensitive pair: EUR/USD.

2. US Initial Jobless Claims (weekly, Thursday, July 10) — Soft labor market data could rattle rate-cut expectations; weekly print above 250k could weaken dollar. Watch USD/JPY closely.

3. ECB Monetary Policy Decision signals (intra-week chatter) — Any hint of easing bias from eurozone policymakers would cap EUR/USD upside. Key level to hold: 1.1400.

4. China June trade data and PBOC fixing guidance (week of July 8) — CNY strength/weakness will track sentiment on yuan intervention and growth momentum; USD/CNY key pair to monitor for EM contagion.

Reader Action Items

1. EUR/USD bears stay in control — The pair has broken below the 1.1450 trendline. Watch 1.1418 support (cited in FXEmpire analysis); a close below 1.1400 could trigger test of 1.1350. Long-term bias remains bearish on Fed-ECB divergence.

2. FOMC minutes are the main event this week — Incoming data has been resilient (services, jobless claims), reducing pressure for near-term cuts. Any "patient" language re-triggers rate-cut rally; any emphasis on "data dependence" on inflation keeps dollar bid. Set alerts at DXY 100.50 and 101.50.

3. USD/JPY: sideways until intervention risk surfaces — Current levels (~155) favor continued consolidation. BoJ has been silent on FX; watch for statements or sudden yen moves as technical trigger. Break above 156.00 unlikely without external catalyst, but break below 154.00 would signal BoJ is acting.

Data Sources: FXStreet, FXEmpire, forex.com, roic.ai, tradingpedia.com, ActionForex, Reuters (historical guidance)
Article timestamp: 2026-07-08 | Coverage period: 2026-07-06 to 2026-07-08