💬 Dollar Rally Pauses: All Eyes on Powell’s Words and U.S. Economic Resilience
💬 Dollar Rally Pauses: All Eyes on Powell’s Words and U.S. Economic Resilience
✅ U.S. Monetary Policy: Rate Hold Expected, Powell’s Comments Take Center Stage
At the July FOMC, a rate hold is widely anticipated. The spotlight now shifts to whether Chair Powell will hint at rate cuts during his press conference.
Key Focus Points:
-
Market sensitivity to remarks from Waller and Bowman, both seen as Trump’s preferred candidates for next Fed Chair.
-
No dot plot at this meeting → Powell’s press conference is the sole guidance.
-
Dovish tone → Likely dollar selling;
Hawkish stance → Dollar rally may resume.
📉 Key Data Flood Ahead of FOMC: Watch for Volatility Triggers
| Data/Event | Forecast | Highlights |
|---|---|---|
| 🇺🇸 ADP Employment (July) | +76K | Rebound from last month’s -33K. Weak result could spark disappointment. |
| 🇺🇸 Q2 GDP (Advance) | +2.6% | Boost from pre-inflation consumption may be discounted. |
| 🇺🇸 Core PCE Price Index | +2.3% (prior 3.5%) | If disinflation is evident, rate-cut expectations could revive. |
🌍 Other Market Movers: Eurozone and Canada in Focus
-
🇩🇪 Germany Q2 GDP: Recession concerns could pressure the euro.
-
🇪🇺 Eurozone sentiment and GDP: Disappointments may fuel ECB easing bets.
-
🇨🇦 Bank of Canada meeting: No rate move expected, but Governor’s tone could trigger CAD volatility.
📈 Market Positioning and Sentiment
-
DXY Index: 98.79 (▼0.10% from previous day)
Slight correction after a sharp early-week rally.
Market indecisive until FOMC clarity. -
U.S. Corporate Earnings: Meta, Microsoft, Qualcomm, eBay among key names this week.
Strong tech earnings → Risk-on mood → Yen selling -
U.S. Treasury Quarterly Refunding Plan: May affect bond yields and FX rates.
🧭 Scenarios for Traders: Likely FX Reactions
| Scenario | Expected Market Response |
|---|---|
| Powell cautious on rate cuts | USD buying resumes, equities may correct |
| Powell turns dovish | Lower yields, weaker USD, risk-on rally |
| Strong GDP & ADP | Supports strong USD → Boosts cross-yen pairs |
| Weak data / cooling inflation | Rate cut expectations build → USD likely to drop |
📊 Forex Strategy Table | July 30, 2025 (Pre-FOMC)
| Pair | Price (approx) | Strategy | Scenario Split | Resistance | Support |
|---|---|---|---|---|---|
| USD/JPY | 148.50 | ⭕ Buy on dips | Bullish: Powell stays hawkish Bearish: Risk-off yen buying or equity correction | 149.20 / 149.80 | 147.90 / 147.30 |
| EUR/USD | 1.1580 | ❌ Sell rallies | Bearish: Hawkish FOMC Rebound: Dovish Powell | 1.1650 / 1.1720 | 1.1520 / 1.1470 |
| GBP/USD | 1.3350 | ⚠ Wait-and-see / Short-term counter-trade | Bullish: USD selling post-FOMC Bearish: Strong U.S. data | 1.3390 / 1.3440 | 1.3310 / 1.3270 |
🔍 Trader Notes
-
USD/JPY remains supported by rate differentials and political uncertainty in Japan. If Powell stays hawkish, 150 yen could be tested. Watch for yen safe-haven flows if equities plunge.
-
EUR/USD faces resistance near 1.1650. Criticism from Germany and France over the U.S.-EU trade deal and eurozone recession fears continue to weigh. Powell’s tone will be decisive.
-
GBP/USD lacks clear direction; fragile support around 1.33. Range-bound and highly reactive to FOMC outcome.
