The US Dollar is maintaining near its yearly highs, with EUR/USD hovering close to its lowest levels. This prolonged stretch in the market has led to a slowing momentum, as evidenced by upper wicks on the weekly chart. Despite recent hawkish comments from Federal Reserve officials Beth Hammack and Austan Goolsbee, the odds for an October rate hike have softened.
Looking at EUR/USD, the Euro makes up 57.6% of the DXY quote, and its long-term prospects remain uncertain due to economic challenges in the Eurozone. A recent sell-off has slowed, and tomorrow's CPI data could influence further movements. The pair appears poised for a potential bullish reversal, supported by a falling wedge formation on the daily chart.
For those seeking USD weakness, GBP/USD presents a stronger case. The pair has been supported around the 1.3200 handle for three weeks, within a range that has defined most of 2026. In contrast, USD/JPY offers a compelling scenario for USD strength, especially if inflation data supports higher rate hike expectations. However, potential interventions may cap upside movements, with key support levels at 158.06, 157.54, and 156.68.
USD/CAD has also seen a slowing rally, with sellers eyeing the 1.4200 handle. A push below this level could indicate a potential pullback towards the 1.4000 handle, forming an evening star pattern on the weekly chart.