Now I have all the macro context. Let me write the post.

The Week in the Dollar

The dollar broke below 100 on the DXY for the first time in weeks, finishing at 99.8 — down 1.6% — as softer US inflation data and a divided Fed kept rate-cut expectations alive while the BOJ’s hawkish hold triggered a violent JPY carry unwind.

Three central banks delivered holds within 48 hours: the Fed at 3.50–3.75% (9-3 vote, July 29), the BoE at 3.75% (6-3, July 30), and the BOJ at 1% (8-1, July 31). But the market read was distinctly bearish for the dollar — US headline CPI had cooled to 3.5% and core to 2.6%, removing the urgency the three Fed dissenters wanted to act on. Meanwhile the BOJ warned core inflation was set to run “clearly above” 2% in the second half of Japan’s fiscal year, keeping yen bulls firmly in charge.

Commodity context reinforced the theme. Gold edged up 0.8% to $4,099 as real-rate expectations dipped. Copper surged 3.0%, supporting the Aussie. Oil was the outlier — WTI fell 2.8% and Brent dropped 6.9% — but even that failed to help the dollar as broad greenback selling overwhelmed the energy complex.

Key Pair Breakdown

USD/JPY -3.8% to 157.4. The week’s biggest mover. The BOJ’s inflation warning landed like a policy signal: Governor Ueda’s board is clearly laying groundwork for another hike. The carry trade, which had pushed USD/JPY above 163 earlier this year, is unwinding in waves. A break below 155 opens a fast lane toward 150.

CAD/JPY -3.5% to 112.27. Double-hit — yen strength plus soft oil dragging the loonie. Brent’s near-7% decline weighed on CAD sentiment even as USD/CAD itself barely moved (-0.5%). CAD/JPY carry has been a popular retail trade; this week’s move will shake out weak hands.

AUD/JPY -3.1% to 110.56. Despite copper’s 3% rally supporting AUD/USD (+0.8%), the yen leg dominated. AUD/JPY has now dropped over 5% from its June peak — a warning for anyone still running leveraged carry in this cross.

GBP/JPY -2.7% to 212.24. The BoE’s 6-3 hold gave sterling no fresh catalyst — it was simply along for the yen ride. GBP/USD gained 1.3% to 1.3487, but GBP/JPY was dragged lower regardless.

EUR/JPY -2.6% to 181.49. Similar story. EUR/USD reclaimed 1.1527 (+1.3%) on broad dollar weakness, but the yen’s gravitational pull overpowered the euro’s gains against the greenback.

NZD/JPY -2.2% to 92.50. The kiwi was the strongest G10 currency against the dollar this week — NZD/USD surged 1.8% to 0.5877 — but even that couldn’t fully offset the yen bid. NZD/JPY still fell over 2%.

NZD/USD +1.8% to 0.5877. Led the G10 outright. Risk-on flows and a firm dairy auction backdrop gave the kiwi room to run as the dollar retreated. Approaching the 0.59 handle — a level it hasn’t held since early Q2.

USD/SEK -1.7% to 9.5093 and USD/NOK -1.6% to 9.4625. Scandis outperformed as European FX broadly benefited from the dollar’s slide. NOK’s gain despite Brent’s 6.9% collapse is telling — it was a dollar story, not an oil story.

EUR/USD +1.3% to 1.1527. Clean break above 1.15. The euro rode the dollar’s weakness rather than any domestic strength — ECB pricing hasn’t shifted materially. Still, the 1.16 handle is now within reach if next week’s US data disappoints.

GBP/USD +1.3% to 1.3487. Grinding higher in tandem with EUR/USD. EUR/GBP was flat at 0.855, confirming this was a pure dollar move — no sterling-specific driver. The BoE’s next meeting isn’t until September 17, giving cable room to drift on external flows.

USD/CHF -1.2% to 0.8074. The franc benefited from both safe-haven demand (yen correlation) and dollar weakness. Below 0.81 now — the SNB won’t love this, but they’re unlikely to intervene at these levels.

Week Ahead Setup

US nonfarm payrolls on Friday, August 7 is the week’s marquee event. A soft print — anything below 150K — would validate the Fed majority’s decision to hold and push DXY deeper below 100. A hot number above 200K could snap the dollar’s slide and force a rethink on the September meeting.

ISM Services on Wednesday will set the tone mid-week. The dollar has room to drift lower early in the week if no data contradicts the “cooling” narrative, but expect position squaring ahead of Friday’s payroll number.

For JPY crosses, the question is whether the unwind continues or stabilises. USD/JPY at 157.4 is still elevated by historical standards — if payrolls miss, a test of 155 is likely. AUD/JPY and CAD/JPY traders should watch copper and oil respectively for confirmation of direction, but the yen leg remains dominant.

NZD/USD is pressing the 0.59 handle. A clean break above would be the first since April and could attract momentum buying.

Bottom Line

The dollar is on the back foot heading into payrolls week, with DXY below 100 and the carry-unwind theme in JPY crosses still looking incomplete. USD/JPY is the pair to watch — if 155 breaks on a soft NFP, the move accelerates from here.

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