Q2 Wrap: A Quiet Quarter That Set Up a Loud Second Half
The second quarter closes today, and the headline numbers suggest a snoozer. Don’t be fooled.
EUR/USD ends Q2 at 1.1438, down modestly from its late-March levels. USD/JPY closes near 161.45, up a few percent. GBP/USD at 1.3353 is roughly where it started April. On the surface: range-bound markets, nothing to see.
But the quarter’s real story happened in June, and it was a dollar breakout in slow motion. The greenback spent April and May firming quietly, then spent June converting that firmness into a trend — breaking EUR/USD down from 1.17, pushing USD/JPY above 160, and cracking sterling from 1.35 to 1.31 before the late-month stabilization.
What Q2 taught us
The dollar doesn’t need a crisis to rally. It needs only a growth differential and patience. Both were present all quarter, and by June, the market finally stopped fighting them.
Equally instructive: the late-June stall. Positioning extremes met seasonal flows, and the trend paused without reversing. That’s what healthy trends do — they consolidate, shake out the weak hands, and either resume or break. Q3’s opening weeks will tell us which.
Carry into Q3
The carry scoreboard is striking: short-yen-long-dollar returned roughly 4% in yield and price combined over the half, with the worst drawdown under 3%. Sharpe ratios like that attract more capital every month, and more capital eventually means more fragility. Q2’s calm is precisely what makes Q3 interesting.
Key Q3 levels to mark tonight: EUR/USD 1.1325 and 1.1620. USD/JPY 159.50 and 162.00. GBP/USD 1.3140 and 1.3540. The side of those ranges we exit July on will probably tell the H2 story.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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