Volatility made a comeback this week as traders navigated rising uncertainty over a potential U.S. government shutdown. The Dollar Index (DXY) bounced sharply from support, EURUSD slipped under renewed pressure, and USDJPY extended its rally before cooling off into Friday.
Adding fuel to the fire, Trump’s tweet late Friday shook risk sentiment, sending equity markets lower and pushing safe-haven flows back into the dollar. With sentiment on edge, investors are now bracing for a high-impact week ahead.
All eyes turn to U.S. CPI, FOMC minutes, and retail sales — three catalysts that could dictate the dollar’s next leg and set the tone for global markets.
Stay disciplined, manage risk wisely, and let’s break down what unfolded — and what to watch next.
📈💲DXY (US Dollar Index)
What happened:
Some “safe-haven” demand also crept in amid volatility from Trump’s tariff threat Friday.
Technically & structurally:
Resistance zone to watch is between 99.88–100.00.
Interpretation:
The recent dollar rebound is showing up clearly in USD/JPY, but it’s less about broad U.S. strength and more about JPY weakness. USD/JPY has been cleaning up the “soft spots” in the currency basket, pushing the pair higher as risk sentiment favors dollar demand. Meanwhile, EUR/USD is drifting lower, reflecting ongoing euro fragility rather than a surge in dollar fundamentals.
📉EURUSD🔴
What happened:
The euro was under heavy pressure all week. It slid toward the 1.1650 zone, flirting with key support.
But Friday’s Trump tweet (threatening 100% tariffs on Chinese imports) delivered a snap risk-off jolt, which magnified USD strength and further punished the euro.
Key levels & technicals:
The ~1.1580–1.1600 area is now critical. A reclaim could open a run to 1.1645 and beyond.
On the downside, if 1.1580 fails, test of 1.1500 becomes plausible.
Mid-range resistance sits around ~1.1645–1.1780.
Interpretation:
EURUSD’s fate will likely hinge on DXY behavior. If the dollar softens (e.g. via dovish surprises or risk-on reversals), euro has a shot at relief rallies. But structurally, the euro is vulnerable: weak politics, soft growth, and less hawkish ECB positioning make it a natural laggard in USD strength episodes.
📈USDJPY🟢
What happened:
The yen was weak all week. Monday’s big move came after Sanae Takaichi was elected leader of the LDP; markets interpreted this as a tilt toward fiscal stimulus and more dovish policy from the BOJ.
The USDJPY traded up past 153.00, hitting multi-month highs, before slight pullbacks toward the end of the week.
Comments from Japan’s Finance Minister warning against “one-sided rapid moves” added a mild cautious tone intraday.
Technicals & pivot zones:
Support cluster lies between 150.70–151.15.
Resistance zone is ~153.65 → 154.50 (a descending trendline since July 2024 may act as a ceiling).
Interpretation:
USDJPY remains in an uptrend, but with caveats. The yen’s weakness is not purely economic; it’s political and policy-driven. Any hint that Takaichi tampers her fiscal ambitions, or that the BOJ hints earlier lift off, could trigger sharp retracements. For now, USDJPY’s trajectory looks bullish, but fragile around support zones.
Technicals and Trade ideas
DXY🟢
DXY Daily Chart
The DXY is rebounding from key support area near 96.20, showing strong bullish momentum. Price has broken short-term resistance, and if it holds above 98.50–99.00, we could target 100 and possibly 102 in the coming weeks. Our bias remains bullish as long as recent lows hold. Our bias remains bullish as long as price sustains above recent lows. Let’s zoom in!
DXY H4
DXY Key Technical Observations
Key Support zone 98.60 = acting as a key pivot area from recent sessions.
Resistance zone: 99.88–100.00 — upper zone where previous rallies have stalled.
Bullish scenario: Holding above 98.60 keeps the breakout structure intact; momentum remains positive.
Bearish scenario: A daily close below 98.60 would signal weakness and open room for a pullback toward 97.80.
EURUSD🔴
EURUSD Daily Chart
Despite last week’s bullish close, the Daily chart looks bearish. This could be a quick retracement before the move toward the August low resumes. Our bias remains bearish. Let’s zoom in.
EURUSD H4
Current Price: Around 1.1619, after a brief recovery from recent lows.
Immediate Bias: Price is showing signs of a short-term retracement before potentially resuming the downtrend.
1.1720–1.1750 - key zone; a strong close above may open room toward 1.19.
1.1450–1.1400 - next downside target if resistance holds.
Momentum remains tilted to the downside, with sellers likely to stay in control unless EURUSD can reclaim and hold above 1.1750. Until then, rallies are expected to face resistance, keeping the broader bearish outlook intact.
Our Bias: Still bearish unless price breaks and holds above 1.1750.
USDJPY🟢
USDJPY Daily Chart
USDJPY is retracing after a strong rally, with price likely to test the 150.25 zone. A rebound from this area could trigger another leg higher toward 154.80, keeping the overall outlook bullish above 150.00. Our bias remains bullish. Now, Lets zoom in!
USDJPY H4
Current Price: Around 151.14, pulling back after a strong rally.
Structure: Price completed a bullish impulse leg and looks like it is retracing.
Retracement Zone: Expecting a move toward the 50% level (~150.25) of the previous upswing.
Upside Target: If price finds support around the 50%, price could resume higher toward the Buyside Target near 154.80.
Our bias remains bullish, as long as price maintains above the 150.00 handle and confirms a reaction from the retracement zone.
Final Word:
Volatility is back, and markets remain on edge. With political risk and major data releases on the horizon, maintaining discipline and clear risk parameters is essential. Stay alert, stay adaptive, and trade with precision - opportunity favors the prepared.
Stay Safe and Happy Trading!