The USD is slightly lower against the EUR, JPY, and GBP as North American traders begin their day. An analysis is provided on the EURUSD, USDJPY, and GBPUSD currency pairs, discussing current trends, risks, and targets to support trading decisions.
Stock Market Overview
In other markets, US stocks begin the session with modest gains. The Dow industrial average is up 134 points, the S&P index rises by 1.81 points, and the NASDAQ increases by 26.94 points. Specific company news sees SMCI’s stock down by 17.031% in premarket trading following disappointing earnings. It approaches the 50% midpoint of its move from the April low to the August high at $44.70, with a recent resistance level near $49. Without a move above this level, sellers may drive prices further down.
AMD shares decrease by 5.46% to $164.75 in premarket trading despite positive earnings and revenues. The price had risen sharply since July’s low, reaching a high of $182.50 last week. Traders consider the 38.2% retracement at $163.70 as a focus point. A dip below this could indicate a move toward the midpoint at $158. The day’s economic calendar is clear of major US or Canadian releases, with oil inventory data and a US Treasury auction scheduled.
As we see the US dollar soften slightly today, derivative traders should be cautious. This could be a temporary dip before the 10-year Treasury auction at 1 PM ET, which will give a clearer signal on interest rate expectations. A weak auction result could push yields higher and reverse the dollar’s minor losses quickly.
The mixed signals in the stock market, with major indices barely up, hide underlying weakness. The significant pre-market drops in tech bellwethers like AMD and SMCI are a warning sign for the Nasdaq and the broader S&P 500. These specific stocks are reacting to earnings, suggesting that even good news isn’t enough to sustain high valuations.
Focus on the Tech Sector
This nervousness in the tech sector should be our focus for the coming weeks. We are seeing profit-taking in stocks that have had massive runs, and this could spread. For derivative traders, this may be a time to consider protective puts on the QQQ ETF, which tracks the Nasdaq 100, as a hedge against a wider tech pullback.
Looking back, the latest July 2025 CPI data came in at 3.4%, a touch above the 3.3% we were expecting, which is fueling this uncertainty. This has put the Federal Reserve’s September meeting into sharp focus, with traders now less certain about a pause in rate hikes. The VIX, a measure of market fear, has reflected this by ticking up to 17.5 from the low 14s we saw in July.
The sharp sell-off in AMD despite beating earnings is particularly telling about the current market mood. Traders are now watching to see if it holds its 38.2% Fibonacci retracement level at $163.70. A break below this support could signal a deeper correction for the semiconductor industry and other high-growth stocks.
We need to pay close attention to the bond market today for guidance. We remember how a poorly received 10-year auction back in late 2023 caused a spike in yields that rattled equity markets for weeks. A similar outcome today would likely strengthen the dollar and add more pressure on growth stocks that are sensitive to higher borrowing costs.
