For most of the quarter, the trade was simple: long the dollar. The Fed carried a hiking bias, the CME FedWatch tool showed the market pricing at least one more 0.25% hike this year, and EUR/USD had bled from its January high near 1.2076 down toward 1.13. That was the priced-in story.
Then Thursday happened. June Non-Farm Payrolls came in at just 57,000 against expectations near 114,000, and the prior month was revised down from 172,000 to 129,000. The dollar lost its footing almost immediately. EUR/USD climbed to 1.1437, its highest level since June 22, and the Dollar Index slid to a two-week low.
That is the real question for the week: was Thursday a genuine turn, or a one-print wobble in an intact uptrend? It is a light data calendar, which puts the weight on two releases — Monday’s ISM Services PMI and Wednesday’s June FOMC minutes. This is not a week to predict a reversal. It is a week to react to whether the data confirms one.
THE JOBS REPORT THAT CRACKED THE DOLLAR
Start with the mechanism. A weak labour market cools inflation pressure, which softens the case for further hikes, which pulls down anticipated future yields, which drags on the dollar. Thursday’s report hit every link in that chain.
Hiring came in at less than half the pace expected. The downward revision to May told markets the slowdown was not a one-month blip. The ISM manufacturing PMI has now retreated for a third straight month, and the unemployment rate ticked a fraction lower than forecast — a detail that, on its own, would read hawkish, but got buried under the headline miss.
The repricing was immediate. Expectations for the Fed shifted more dovish, and with the CME FedWatch tool still showing a hike penciled in for September, there is now real room for that pricing to unwind. Falling US gasoline prices, down to roughly $3.81 from $4.20 a month ago, add to the disinflation narrative. Global equities posted their best week in two months.
For traders, the takeaway is not “the dollar is finished.” It is that the one-way dollar trade now has a two-way risk. That changes how you size and how you react.
WHY THE FOMC MINUTES MATTER MORE THAN USUAL
Wednesday at 2:00 PM ET brings the minutes from the June FOMC meeting. Normally, minutes are backward-looking and get faded. Not this time.
The June meeting happened before this jobs report. So the minutes show a committee that was still leaning hawkish, debating a path the data has just undercut. The market’s job on Wednesday is to reconcile the two.
Here is the if/then. If the minutes reveal a committee firmly committed to hiking and worried about sticky inflation, the dollar gets a reason to stabilise, and Thursday’s move looks like an overreaction. If they show hesitation, division, or growing attention to labour-market softness, the dovish repricing extends and the dollar stays offered.
Monday’s ISM Services PMI (previous: 54.5, forecast: 54.2) is the appetiser. Services are the bulk of the US economy. Another soft print stacked on the jobs miss would harden the cooling-growth story before the minutes even land.
EUR/USD: THE KEY TEST AT THE NECKLINE
This is the pair where the fundamental and technical stories collide.
Fundamentally, the euro just got a tailwind it had waited weeks for. Technically, it is still the weaker chart. On the weekly, EUR/USD has carved out a head-and-shoulders pattern — a classic bearish reversal shape — and it is now hovering right at the neckline, below both its 50-week moving average and the 23.6% Fibonacci retracement.
So the levels matter more than the narrative right now. Immediate resistance sits at 1.1463, then 1.1487. The line in the sand for bulls is the 23.6% retracement near 1.1630; a weekly close above it would invalidate the bearish structure. On the downside, support runs at 1.1421, then the psychological 1.1400, with sellers eyeing a deeper target near 1.1300.
The if/then writes itself. If the bounce holds above 1.1400 and pushes through 1.1463 on soft US data, the reversal case builds. If the euro fails at resistance and slips back below 1.1400, the head-and-shoulders reasserts and the dollar bears go quiet. Wednesday’s minutes are the most likely trigger either way.
USD/JPY: INTERVENTION MEETS A 39-YEAR HIGH
USD/JPY is the counterweight to the soft-dollar story. The pair pushed to a fresh 39-year high last week, drew repeated intervention warnings from Japanese officials, and finally saw central bank yen buying drag it back below ¥161. Then it clawed most of that back.
The retracement was not deep enough to shake out trend followers, and the weekly candle printed a spinning top doji — the technical signature of indecision. Structurally, the yen remains pressured by Japan’s debt load, which is why many desks still treat these intervention-driven dips as buying opportunities rather than reversals.
That sets up a genuine cross-current this week. Support sits at 160.79, then 160.48 and 159.98; resistance runs at 161.52, 162.37 and 163.00. If a broadly softer dollar finally gives the yen traction and intervention risk stays live, dips below 161 could extend. If dip buyers step back in as they have all year, the 39-year-high structure stays intact. This is the pair to watch for whether dollar weakness is broad or just a EUR/USD story.
KEY EVENTS THIS WEEK
– ISM Services PMI — Monday, July 6, 10:00 AM ET (previous: 54.5, forecast: 54.2). The first read on the largest slice of the US economy after Thursday’s jobs miss. Another soft number compounds the cooling-growth story.
– FOMC Meeting Minutes — Wednesday, July 8, 2:00 PM ET. The June meeting’s minutes, now read against a jobs report that undercut the hawkish case. The most important scheduled event of the week.
– CAD Employment Change · CAD Unemployment Rate — Friday, July 10, 8:30 AM ET. Employment Change forecast: 10.0K (previous: 87.8K). Unemployment Rate forecast: 6.6% (previous: 6.6%). A sharp expected cooldown in Canadian hiring — a direct mover for USD/CAD into the weekend.
Two more to keep on the radar, both from the sources but without fixed US-time slots: the ECB publishes the minutes of its last meeting, with Christine Lagarde due to speak on the economy and the policy outlook — a live catalyst for EUR pairs alongside euro-area PPI early in the week. And the Reserve Bank of New Zealand meets this week, with a public holiday in New Zealand on Thursday that may thin NZD liquidity.
Circle Wednesday 2:00 PM ET. In a quiet data week, the minutes carry the burden of confirming or denying Thursday’s move.
WHAT THIS MEANS FOR TRADERS
This is not a week to anticipate a trend change. It is a week to let the data confirm one — or not.
One soft jobs report does not undo a quarter of dollar strength. But it does introduce two-way risk into a trade that had only gone one direction. The setups are conditional. If Monday’s ISM disappoints and Wednesday’s minutes read soft, the dovish repricing extends and dollar shorts find footing across EUR/USD and USD/JPY. If the minutes stay hawkish and services hold up, Thursday’s move fades and the dollar’s structural bid returns.
The discipline is in respecting the levels, not the narrative. Have EUR/USD’s 1.1400 and 1.1463 marked. Know where USD/JPY’s 161 handle sits. Size for a market that can whip in either direction on a single line in the minutes.
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FREQUENTLY ASKED QUESTIONS
WHY DID THE US DOLLAR FALL AFTER THE JUNE JOBS REPORT?
June Non-Farm Payrolls came in at 57,000, well below the roughly 114,000 expected, and May was revised down to 129,000. A cooling labour market softens the case for further Fed hikes, which lowers anticipated future yields and weighs on the dollar. EUR/USD rose to 1.1437 and the Dollar Index fell to a two-week low in response.
WHAT COULD THE FOMC MINUTES MEAN FOR EUR/USD THIS WEEK?
The minutes, released Wednesday at 2:00 PM ET, cover the June meeting — held before the weak jobs data. If they show a committee firmly committed to hiking, the dollar may stabilise and EUR/USD’s bounce could fade. If they reveal hesitation or growing focus on labour-market softness, the dovish repricing may extend and support EUR/USD toward resistance near 1.1463.
WHAT IS THE HEAD-AND-SHOULDERS PATTERN ON EUR/USD?
It is a bearish reversal pattern on the weekly chart, with the pair currently hovering near its neckline below the 50-week moving average. A weekly close above the 23.6% Fibonacci retracement near 1.1630 would invalidate the bearish outlook. A rejection at resistance that sends price back below 1.1400 would keep the downside target near 1.1300 in play.
IS THE DOLLAR’S UPTREND OVER?
One report is not a trend. The Dollar Index remains in a longer-term uptrend that has stalled at resistance, and the CME FedWatch tool still shows a hike expected in September. This week’s ISM Services PMI and FOMC minutes are the next tests of whether the dovish repricing sticks or the dollar’s structural bid returns.
DISCLAIMER
This content is produced by ThinkCapital for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or a solicitation to trade. All trading involves risk. Past performance is not indicative of future results. ThinkCapital’s challenge programs involve simulated trading environments using virtual funded accounts. The term “funded” refers exclusively to virtual funding. No real capital is deployed in ThinkCapital challenge accounts. Traders should ensure they understand the risks involved before participating in any financial market activity.
