Dollar Starts June in Command: Weekly Wrap
The first week of June delivered a clear message: the dollar is back in charge.
EUR/USD closed the week at 1.1523, down 100 pips, after spending five sessions pinned below 1.16. USD/JPY held its break above 160, finishing at 160.33. Even sterling, the market’s darling, slipped to 1.3336. When all three majors point the same direction, this isn’t pair-specific news — it’s a dollar move.
The rates story is doing the work
The driver, as it has been all year, is interest-rate differentials. US yields remain comfortably above their European and Japanese counterparts, and the economic data hasn’t given the Fed any reason to change course. Meanwhile the European Central Bank faces an economy that keeps undershooting. You don’t need a PhD to see where the money flows in that setup.
The one thing that could spoil it
Positioning. Speculative dollar longs have built up steadily for six weeks, and the latest positioning data shows the trade getting crowded. Crowded dollar longs are vulnerable to a single soft US data print — an employment report, an inflation surprise — triggering a violent squeeze.
That’s not a reason to fight the trend. It’s a reason to trail your stops rather than widen them.
Weekend levels
EUR/USD: support 1.1470, resistance 1.1580. USD/JPY: support 159.50, resistance 160.70. GBP/USD: support 1.3300, resistance 1.3400. Have a good weekend, and let the market come to you next week.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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