Insights 
VT 
The US dollar’s momentum weakened after an unexpected decline in US jobs data on Friday, which contrasted its previous strong position. The EUR/USD pair rose from eight-week lows around 1.1400 to nearly 1.1600, challenging key technical levels. Sellers and buyers are experiencing a more neutral short-term bias, with no considerable shift toward dollar selling yet.
USD/JPY witnessed a drop from above 150.00 to near 147.00, moving past crucial moving averages, suggesting a bearish short-term outlook. This movement is influenced by changing bond yields and uncertainties around US-Japan trade relations. GBP/USD ended a six-day losing streak, but the bounce was limited and didn’t overcome key technical levels, maintaining a bearish to neutral bias depending on price action around these levels.
Usd Cad Patterns
The USD/CAD pair shows similar patterns, staying between key hourly moving averages, lacking strong negative momentum. The AUD/USD pair managed to surpass its 100-hour moving average after weak jobs data affected the dollar. However, it remains a neutral bias, needing further advances to decisively shift momentum in favour of buyers.
Overall, the charts suggest a reduced dollar momentum with a more neutral bias but not a definitive move to a downturn. Continued weak labour data might pressure the Fed towards rate cuts, limiting the dollar’s potential upside. Inflation concerns from tariffs and the politicisation of data could undermine confidence in US economic data, further complicating the outlook for the dollar.
The weak US jobs report from Friday, August 1st, has completely changed the game for the dollar. After climbing for weeks, the dollar’s momentum was stopped dead by the report, which showed the economy added only 95,000 jobs against an expected 180,000. We also saw the unemployment rate tick up to 4.1%, surprising everyone and putting a cap on the dollar’s strength.
This sudden weakness has markets scrambling to reprice the Federal Reserve’s next move. We’ve seen fed fund futures pricing for a September rate cut jump from around 30% last week to over 70% this morning. This sharp shift in interest rate expectations is the main reason the dollar fell, especially against the yen.
Derivative Traders and Volatility
For derivative traders, this means volatility is back on the menu. The VIX, a measure of expected market turbulence, jumped to 18 after the jobs data, its highest level in three months. This suggests we should prepare for wider price swings in the coming weeks, making options strategies more attractive but also more expensive.
The technical picture is now mostly neutral, meaning the dollar isn’t collapsing, but its upward path is blocked. A prudent response would be to hedge long dollar positions with puts or consider selling call options on pairs like USD/CAD, which is still holding above key support. We are not yet in a firm downtrend, so aggressive bearish bets are premature.
We see the most evident weakness in USD/JPY, which fell through key support levels to near 147.00 as US bond yields dropped. The shrinking interest rate difference between the US and Japan makes holding dollars less attractive than yen. Buying puts on USD/JPY offers a direct way to trade this specific weakness.
On the other hand, pairs like EUR/USD and AUD/USD have just shifted to a neutral bias, stuck between technical levels. This range-bound price action could be an opportunity to sell options strangles, collecting premium as the market decides on its next direction. Be aware, however, that a significant break in either direction would pose a risk to this strategy.
Fundamentally, the situation is complicated by inflation, which remains sticky due to the lingering effects of tariffs. The last CPI reading in July 2025 was 3.4%, putting the Fed in a tough spot reminiscent of the policy struggles we saw back in 2022 and 2023. This conflict between slowing growth and persistent inflation creates significant uncertainty for the dollar’s path forward.
