August Wrap: The Dollar’s Worst Month of 2026
The monthly close is in, and the scorecard is unambiguous: August belonged to the dollar bears.
EUR/USD ends August at 1.1589, up from 1.1544 in July and a massive 2.6% above the June close of 1.1300. GBP/USD closes at 1.3540, its second-highest monthly finish of the year. USD/JPY at 160.12 is the only major where the dollar gained — and even there, the pair remains far below its July peak of 163.79.
How the month unfolded
August opened in post-shock consolidation, with the market unsure whether July’s yen collapse was a one-off or the start of something bigger. By mid-month, the answer was emerging: the dollar was weakening broadly, not just against the yen. Soft US data, fading Fed-cut expectations, and a systematic unwinding of dollar longs pushed EUR/USD from 1.15 to above 1.17 — the pair’s best month since late 2024.
The final week brought profit-taking, as it usually does after a run like that. But the monthly candles tell the real story: the dollar’s uptrend, intact since spring, has been broken at least temporarily.
September: the month that decides
September is stacked. Fed and ECB meetings, US employment and inflation data, quarter-end rebalancing, and the return of full liquidity after the summer. The market enters the month genuinely uncertain — dollar-bullish positioning has been cut but not reversed, and the euro’s rally needs policy validation to extend.
Key levels into September: EUR/USD 1.1712 above, 1.1500 below. USD/JPY 155.30 below is the carry traders’ line in the sand. GBP/USD 1.3675 above, 1.3420 below.
Enjoy the last weekend of August. September rarely disappoints — in either direction.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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