Monday Musings: The Dollar’s Quiet Comeback
Monday morning, and the dollar is creeping back.
Not dramatically — there’s no headline, no shock. But the drift is clear. EUR/USD has slipped from 1.1628 on Friday to the mid-1.15s, and the tone has changed from the carefree dollar-selling of August to something more two-way. USD/JPY’s recovery to 154.42 after the Monday low tells the same story: the panic bid for yen is fading, and the dollar is absorbing the flows.
The narrative rotation
August’s story was “US slowdown, Fed cuts coming, sell dollars.” September’s story is more nuanced. The US data has been mixed rather than weak, the Fed has pushed back gently on aggressive cut pricing, and the market’s dollar shorts — built up so confidently through the summer — are suddenly looking less clever.
None of this reverses August’s damage. EUR/USD at 1.15+ is still well above the June lows. But trends need oxygen, and the short-dollar trade is starting to breathe thin air.
sterling’s tell
Watch GBP/USD this week. Sterling held up best during the dollar’s summer slide, and it usually peaks last in a dollar cycle. If the pound breaks below 1.3465 — last week’s low — while EUR/USD holds 1.15, it would confirm that the dollar recovery is broad-based rather than euro-specific weakness. If sterling leads the decline, the dollar’s comeback has real legs.
Otherwise, a quiet week on the calendar — which, in September, usually means the market manufactures its own drama. Stay liquid, stay humble.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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