The dollar didn’t just hold its post-Fed gains last week. It pressed further, and EUR/USD slipped to a fresh low mid-week before finishing Friday near 1.1382.
The move that began with the June FOMC decision is still running. Broad dollar buying has carried across the major pairs, and the euro has stayed on the back foot.
This week tests whether the strength is built on something durable. The US jobs report lands Thursday, a day earlier than usual, with ISM manufacturing the day before and Fed Chair Kevin Warsh on the wires. The question is simple: is this still a rate story, or is it something else?
STILL THE DOLLAR’S STORY
The selloff in EUR/USD that began on June 17, the day of the Fed’s decision, has not reversed. The pair was trading near 1.1600 at that meeting and touched the 1.1325 area last Wednesday before steadying.
This has been a dollar move more than a euro move. USD-centric buying has been seen across the broad forex market, with EUR/USD correlating closely with other majors.
For traders, that distinction matters. When a currency falls because its counterpart is strong everywhere, the read is the dollar, not the euro. The catalyst this week is on the US side of the pair.
RATES, OR RISK?
Here is where the story gets more interesting. The easy explanation is the Fed’s hawkish June projections. The cleaner read is that the driver is less simple than that.
The case: US equities have turned nervous again, and firmer Treasury yields have done as much to support the dollar as the rate outlook. When risk appetite fades, money looks for safe havens, and the dollar is the default.
That changes what to watch. If the driver is risk-off rather than rates, then the US stock market becomes the barometer for EUR/USD. A steadier equity tape would ease the pressure. A weaker one would keep the euro underweight.
THE OIL AND IRAN BACKDROP
There is one more live input. The US-Iran situation remains fragile, though it has been simmering since late February with periodic signs of progress toward an agreement.
Oil, for now, is pointing the calmer way. WTI crude finished below $70 on Friday and reached a fresh three-month low. Falling energy prices ease the inflation pressure that would otherwise reinforce the hawkish dollar case.
For traders, oil stays the inflation variable to watch. A sustained spike on any escalation would feed straight back into the rates-and-dollar chain. A quiet tape leaves the jobs data as the week’s main event.
EUR/USD: THE LEVELS IN PLAY
EUR/USD closed Friday near 1.1382, inside a speculative range of 1.1317 to 1.1510 that third-party technical analysis flags for the week.
The immediate battleground is 1.1400. That analysis describes the level as “cheap, not expensive,” but reclaiming and holding it has proven tough, and a sustained move back above it would suggest institutions are positioning for a different outcome.
That sets up a clean if/then. If 1.1317 gives way, it opens room into lower depths and confirms the post-Fed momentum. If buyers reclaim and hold 1.1400, the path toward 1.1510 comes back into view. This is not a market to predict. It is a market to react to, level by level, with the US equity tape as the tell.
KEY EVENTS THIS WEEK (ET)
- Tue Jun 30, 8:30 AM — GDP m/m (CAD)
- Wed Jul 1, 9:00 AM — BOE Gov Bailey Speaks (GBP) · Fed Chair Warsh Speaks (USD)
- Wed Jul 1, 10:00 AM — ISM Manufacturing PMI (USD)
- Thu Jul 2, 8:30 AM — Average Hourly Earnings m/m · Non-Farm Employment Change · Unemployment Rate (USD)
Thursday is the week’s main event for the dollar. The jobs report arrives early this week, and the consensus points to a cooler print: roughly 114K new jobs versus 172K previously, with the unemployment rate seen holding at 4.3%. A firm number would validate the dollar’s run. A weak one would hand the doubters their case.
ISM manufacturing on Wednesday is the warm-up, expected near 53.7 after 54.0, and Fed Chair Warsh speaks the same day in his first weeks setting the tone. Canadian GDP on Tuesday, forecast at 0.4% after a contraction, frames USD/CAD but does not reorder the global picture.
WHAT THIS MEANS FOR TRADERS
This is a week that rewards reacting to data, not anticipating it. The dollar’s strength is already in the price. The job now is to see whether Thursday’s jobs report earns it or fades it.
A market driven this much by risk sentiment, where the equity tape can swing the dollar as fast as any data point, is where process beats conviction. The traders who handle weeks like this well are the ones with a plan for both outcomes, not a forecast for one.
For traders looking to evaluate their strategy with simulated funded capital, ThinkCapital offers structured challenge programs designed to test consistency and risk management.
PUT YOUR STRATEGY TO THE TEST
A data-heavy week is exactly the environment that shows whether a strategy holds up under pressure. If you have been meaning to test yours, this is a fair week to start.
FREQUENTLY ASKED QUESTIONS
WHY IS THE DOLLAR STILL RISING AFTER THE FED HELD RATES?
The Fed left rates unchanged in June, but its projections pointed to a higher path, and the dollar has held those gains since. The strength is also being supported by nervous equity markets and firmer Treasury yields, which push money toward safe havens. The result is broad dollar buying across the major pairs, not just against the euro.
WHY IS THE US JOBS REPORT ON THURSDAY THIS WEEK?
The US jobs report usually lands on the first Friday of the month, but this month it is released Thursday, July 2. The data itself is unchanged in importance: it is the week’s main catalyst for the dollar, and the consensus looks for a cooler reading of about 114K jobs versus 172K previously.
WHAT EUR/USD LEVELS MATTER THIS WEEK?
According to third-party technical analysis, EUR/USD is working within a speculative range of 1.1317 to 1.1510. The 1.1400 area is the immediate pivot, with 1.1317 as the support to watch on the downside. The levels frame the reaction rather than guarantee a direction.
HOW DOES THE STOCK MARKET AFFECT EUR/USD RIGHT NOW?
When risk appetite weakens, traders tend to move into the dollar as a safe haven, which pressures EUR/USD. The US equity tape is currently a key barometer for the pair, so a steadier stock market could ease the euro’s downside while a weaker one could extend it.
DISCLAIMER
This content is provided for educational and informational purposes only and does not constitute financial, investment, or trading advice, or any recommendation to buy or sell any instrument. Trading involves significant risk. ThinkCapital challenge programs operate in simulated environments using virtual funds; no real capital is traded. Market data and third-party analysis referenced here are attributed to their sources and were accurate at the time of writing. Always conduct your own research and consider your circumstances before trading.
