The US Dollar continued to weaken due to softer US housing data and a report on Trump’s potential early nomination for the next Federal Reserve Chair in September or October. The Dollar Index (DXY) was last observed at 97.20.

Typically, the Federal Reserve Chair is nominated three to four months before their term begins, and Jerome Powell’s term ends in May 2026. An earlier announcement might allow the incoming chair to influence market expectations on rates.

Geopolitical Easing and Currency Movements

The Euro gained strength amid Germany’s increased spending on defence and infrastructure. Simultaneously, a “sell USD” trend, a stronger Chinese Yuan, and geopolitical easing boosted Taiwan Dollar, Thai Baht, and South Korean Won.

The daily momentum for the US Dollar turned mildly bearish, with the Relative Strength Index declining. A daily close below previous lows of 97.50/60 could lead to support at 97, while resistance sits at 98.60 and 99.30.

The Euro/US Dollar consolidated gains near 1.1700, while GBP/USD maintained levels above 1.3700. Gold price held a positive bias amidst a weaker USD, though lacking strong bullish momentum. Bitcoin Cash saw positive growth nearing a $500 level, driven by on-chain data and recent price surges.

In light of the weaker-than-expected housing data from the United States and the shift in political focus toward an earlier-than-usual nomination for the Federal Reserve Chair, the dollar has continued its decline, bringing the Dollar Index (DXY) to 97.20. The index, which measures the strength of the US currency against a basket of others, typically reacts predictably to macroeconomic changes. However, this time, the report surrounding the potential early nomination of Trump’s preferred Fed Chair seems to have added a new layer of interest, particularly as it could materially reshape policy guidance much earlier than markets would normally anticipate.

Ordinarily, a nomination comes much closer to the expiry of the sitting chair’s term, but signalling intent this far in advance alters the room for speculation around policy continuity, inflation tolerance, and potential attitude toward balance sheet roll-off. We’re not merely assessing a policy trajectory here – we are also dealing with market psychology and expectations being potentially reset earlier than planned. In this environment, traders should already be reframing how they assess pricing risks around Treasury yields and inflation acceleration.

With European fiscal policy becoming more expansionary — highlighted by renewed government commitments in Germany to invest more heavily in defence and infrastructure — the euro continues to draw support. Traders positioned long EUR/USD are now seeing payoffs, as regional sentiment surrounding growth becomes less tied to the European Central Bank’s dovish lag. The increased government outlays are providing torque to the euro on expectations that economic momentum will be buoyed without immediate dependence on rate hikes.

Asian Currency Dynamics and Market Momentum

In Asia, there has been a broader tilt away from the US Dollar, not just due to the Fed story, but also as geopolitical nerves cooled in the Taiwan Strait and broader regional concerns lessened. This helped currencies such as the Taiwanese Dollar, Thai Baht, and South Korean Won, which typically serve as barometers of risk sentiment. We’ve particularly noted the resilience of the Yuan, supported in part by mainland state banks maintaining offshore liquidity better than expected.

Momentum indicators on the Dollar remain uninspiring. The RSI’s downward slope matches the narrative, though not aggressively so. Should the index close below 97.50, the next support level appears around 97. A definitive break of that area might trigger a broader realignment of USD positioning, particularly among leveraged funds holding directional bets through DXY futures. Resistance levels remain clearly defined near 98.60 and 99.30, creating a relatively narrow risk range for options-selling strategies.

The Euro-Dollar pair, meanwhile, appears comfortable near the 1.1700 mark, though without strong demand to drive it much higher intraday. GBP/USD also holds above the 1.3700 level, with discretionary flows continuing to support sterling as political headwinds in the UK appear to have lessened for now. The absence of further hawkish surprises from the Bank of England may result in traders widening their range-bound expectations, especially in calendar spread strategies.

Gold prices have retained an upward bias over the week, but flows into bullion-backed ETFs suggest a lack of conviction. Even as the dollar falters, we haven’t seen strong breakout signals from technical indicators. This makes it a rather unattractive short-term long unless tied to broader risk-off hedging strategies, which haven’t resurfaced with any strength.

Bitcoin Cash has moved closer to $500, and recent on-chain data shows a pick-up in wallet activity and transaction volume in line with speculative interest. That doesn’t change the medium-term risk associated with crypto exposure, but it opens up room for intraday breakouts, potentially inviting volatility sellers to step in with widened strangles.

In the coming sessions, with macro attention torn between US political moves and diverging central bank paths, we need to monitor not only headline data but also narrative shifts. Unorthodox announcements, timing surprises, or misaligned guidance could all translate into unexpected shifts in implied volatilities. That’s key for positioning strategies across FX options or short-term futures. Slower momentum in dollar trends may tempt contrarian setups, but volume and conviction remain the missing elements.

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