Friday Wrap: Three Weeks of Dollar Dominance, No End in Sight
Friday wrap after a week that confirmed what the previous two suggested: this is a full-blown dollar move, and it isn’t finished.
EUR/USD closed at 1.1378, down 100 pips. GBP/USD at 1.3229, down 160. USD/JPY at 157.46, recovering steadily from the Monday panic low. Three pairs, one direction. When the dollar moves like this — broadly, persistently, against every alternative — the cause is a fundamental repricing, not a positioning blip.
The repricing, in one paragraph
The market entered September pricing a friendly Fed and European stabilization. It’s exiting September pricing the opposite: US rates higher for longer, European growth worse than feared, and Japan too busy fighting its own currency battles to matter for the dollar. That combination is the strongest dollar cocktail there is, and it’s fully priced now — but not yet overpriced.
The casualties
August’s dollar bears have been carried out. The short-dollar trade was the consensus in late August; consensus trades rarely survive contact with a data regime change. Meanwhile, the yen’s dramatic September — down to 152.90 and back — has resolved into a stalemate around 157, which ironically makes the dollar’s gains elsewhere look cleaner.
Weekend levels
EUR/USD: 1.1354 support, 1.1481 resistance. GBP/USD: 1.3210 support, 1.3389 resistance. USD/JPY: 156.53 support, 158.99 resistance. If EUR/USD breaks 1.1354 next week, expect headlines about 1.10 by Halloween — and expect them to be premature, but trade the break anyway.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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