The U.S. dollar continues to face heavy selling pressure as dovish Federal Reserve expectations and political noise weigh on sentiment. Major currency pairs such as EUR/USD and USD/JPY are showing technical reactions near key levels, while traders await fresh macro catalysts.
U.S. Dollar Index Slides as Fed Speculation Deepens
The U.S. Dollar Index (DXY) slipped closer to its lowest point of the year on Monday, reflecting traders’ growing belief that the Fed could adopt a more accommodative stance later in 2025. The latest Dallas Fed Manufacturing Index showed a slight improvement from -15.3 to -12.7 in June, but still points to contraction in regional activity.
Investors also took note of political headlines, particularly former President Trump’s remarks about replacing Fed Chair Powell by September—further fueling uncertainty around future monetary policy.
Key support: 96.70 – a break below could send the DXY toward the 95.40 zone.
EUR/USD Pushes Higher Despite Softer German Inflation
EUR/USD continues its upward grind, buoyed by broad dollar weakness. Interestingly, the latest inflation report from Germany showed a surprise decline, with CPI falling from 2.1% to 2.0% year-over-year—against expectations for a rise to 2.2%. Despite this, euro bulls remain in control.
Technical Outlook:
- A break above 1.1800 would open the path to 1.1900+
- Support holds around 1.1700
GBP/USD Hits Pause Just Below Key Resistance
After a strong multi-week rally, GBP/USD appears to be consolidating gains below the 1.3750 level. Traders are likely waiting for further economic data or central bank cues to push the pair in either direction.
Technical Watch:
- A close above 1.3750 may trigger a run toward 1.3835
- Short-term support lies near 1.3680
USD/CAD Weakens as Commodity Currencies Attract Flows
USD/CAD drifted lower to start the week, despite subdued oil prices. The Canadian dollar remains supported by optimism around U.S.-Canada trade talks and commodity-linked strength.
Next levels:
- A slide below 1.3600 could send the pair toward 1.3550
- Resistance capped around 1.3685
USD/JPY Tests Critical Support Despite Weak Japan Data
USD/JPY is approaching a key technical floor between 143.50 and 144.00. This comes even as Japan’s May industrial production rose only 0.5%, well below forecasts of 3.5%. The dollar’s inability to rally on weak foreign data signals deeper bearish pressure.
Bearish Breakdown Watch:
- Below 143.50 opens door toward 140.00
- Resistance remains firm at 148.30
✅ Summary
The U.S. dollar remains under pressure amid growing Fed policy uncertainty and global trade headlines. While EUR/USD and GBP/USD aim higher, USD/JPY and USD/CAD risk breakdowns if sentiment worsens. With a packed economic calendar ahead, volatility is likely to pick up—particularly around U.S. jobs data and Fed commentary later in the week.
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