The US dollar endured a tough stretch last week, with the DXY sliding close to 2%, wiping out much of August’s earlier strength, as traders leaned more firmly into expectations of Fed rate cuts in September amid rising doubts about central bank independence. The weaker greenback helped gold climb to a five-week high on safe-haven demand, while repeated pullbacks left the dollar testing key support levels. Markets were jittery as officials’ dovish commentary underscored the likelihood of easing. Friday’s core PCE inflation reading came broadly in line with expectations, leaving the market focus squarely on upcoming labour market indicators to gauge whether the Fed has room to ease. Next week’s ADP employment report and the all-important nonfarm payrolls will be critical in shaping the policy outlook: soft prints would reinforce the case for a September cut and could deepen dollar losses, while stronger-than-expected results may help the greenback stabilize.

The Canadian dollar extended its strength last week, with USD/CAD dropping more than 1.3% from its August peak and testing the lower end of its recent range. The move was largely fuelled by falling US Treasury yields and a softer greenback, while Canada’s own data showed a mild GDP contraction, keeping expectations intact for a cautious Bank of Canada. Despite the weaker growth backdrop, the loonie found firm support as global investors leaned into Fed rate-cut bets, and technical flows amplified the downswing. Looking ahead, Canada’s upcoming employment report will be pivotal in shaping sentiment: a solid labour print could offset growth worries and underpin CAD strength, while fresh signs of job market weakness may revive talk of BoC easing and limit further gains. Alongside US nonfarm payrolls and trade headlines, the data will determine whether the loonie can extend its momentum or settle into consolidation.

Expected weekly trading range:

1.35 - 1.39

The euro managed to hold its ground last week, showing resilience despite a stronger dollar backdrop. Momentum was supported by an ECB survey pointing to stable consumer inflation expectations, which helped reassure markets that the euro area is not facing immediate disinflationary risks. This confidence gave EUR/USD upward traction, though resistance near 1.174 capped further gains. At the same time, the dollar’s August decline, driven by persistent Fed-cut bets and lingering questions around central bank independence, also provided a relative boost to the single currency. Looking ahead, Eurozone CPI will be a crucial driver: a firmer reading would reinforce the ECB’s cautious stance and bolster the euro’s outlook, while a softer print could revive speculation of additional easing later this year, leaving the currency vulnerable to renewed downside pressure.

Expected weekly trading range:

1.59 - 1.64

The British pound closed August on a firmer footing, up roughly 1.5% on the month, even as it slipped modestly on Friday amid renewed fiscal worries. Sterling’s resilience was underpinned by elevated UK inflation which kept markets cautious on the pace of Bank of England easing. That backdrop, combined with relatively solid economic momentum, helped offset bouts of dollar strength tied to political uncertainty over Fed independence. Midweek, the pound briefly dipped before recovering, as fiscal debates over taxing bank reserves added a domestic headwind. In the week ahead, the spotlight falls on US nonfarm payrolls, any upside surprise could give the dollar fresh traction at sterling’s expense, while UK PMI, retail sales, and central bank commentary will shape expectations around whether the BoE maintains its current cautious stance or begins signalling a more dovish tilt.

Expected weekly trading range:

1.83 - 1.89

The yen strengthened last week as USD/JPY slid from peaks, its sharpest weekly pullback in August. The move was driven by Fed Chair Jerome Powell’s dovish remarks at Jackson Hole, which reinforced bets for a September rate cut and dragged the dollar broadly lower. Traders who had braced for a firmer stance unwound positions quickly once Powell struck a cautious tone. At the same time, Japan’s own inflation signals remained soft, limiting expectations that the Bank of Japan will move aggressively in the near term. Still, the yen benefitted from shifting global sentiment as investors weighed policy divergence, risk appetite, and evolving Fed bets. Looking to the week ahead, US labor will be pivotal. Japan’s own data will also be closely watched, with further economic cooling potentially strengthening the case for a patient BoJ.

Expected weekly trading range:

105.40 - 108.61

The Swiss franc lost some ground last week as USD/CHF drifted lower, reflecting both dollar swings and the franc’s muted safe-haven appeal. A softer US dollar trend earlier in August had briefly lent support, but by the latest stretch, renewed caution around global growth, US labour figures, and Powell’s Jackson Hole remarks pulled flows away from the franc. Domestically, Switzerland’s inflation backdrop remains subdued, giving the Swiss National Bank little urgency to tighten policy, which limits upside for the currency. Meanwhile, ongoing tariff pressures, particularly on exports such as luxury goods and pharmaceuticals, have raised concern over economic resilience. Looking ahead, the franc’s performance will hinge on US data this week, especially nonfarm payrolls, as well as Swiss releases on growth and inflation.

Expected weekly trading range:

0.57 - 0.59

The Chinese yuan edged higher last week as the USD/CNY pair drifted lower, supported by signs of steadier sentiment and subtle guidance from the People’s Bank of China to reinforce currency stability. Despite lingering economic headwinds from weak retail sales, sluggish industrial output, and a struggling property sector, policymakers’ efforts to lean against excessive depreciation helped boost confidence in the yuan. Looking ahead, traders will watch closely whether incoming Chinese data points to further cracks in growth or early signs of stabilization, while any additional PBOC measures in support of the currency could extend recent gains. Broader dollar direction tied to US monetary policy shifts will also shape the near-term outlook, but the bias remains tilted toward modest yuan strength if Beijing continues its proactive stance.

Expected weekly trading range:

5.11 - 5.27

The Indian rupee ended last week on a softer footing, pressured by the announcement of steep new US tariffs on Indian goods even as brief strength followed Powell’s dovish tone at Jackson Hole. The Reserve Bank of India stepped in to temper volatility, keeping USD/INR from breaking higher despite the dollar’s momentum. Looking to this week, the rupee will remain highly sensitive to US economic releases that could sway Fed rate-cut expectations, while India’s own GDP and industrial data may set the tone for domestic confidence. With forecasts split between near-term dollar strength and longer-term rupee resilience, policy guidance and intervention will likely play a decisive role in limiting sharp swings.

Expected weekly trading range:

63.19 - 65.11

The Australian dollar posted a steady gain last week as improved global risk appetite, support from a firmer Chinese yuan, and softer US dollar momentum pushed AUD/USD higher. The currency benefited from breaking past key resistance levels, underlining growing confidence in its near-term outlook. Heading into this week, the focus will remain on risk sentiment, Fed policy signals, and upcoming data out of China, all of which tend to amplify AUD moves given Australia’s trade ties. Meanwhile, domestic cues such as RBA commentary and commodity price trends will also be closely watched, with markets leaning toward the Aussie retaining its recent strength if global conditions remain supportive.

Expected weekly trading range:

0.89 - 0.91

The New Zealand dollar strengthened last week, with NZD/USD pushing higher as improved momentum and softer US dollar conditions supported gains. The move was underpinned by technical indicators pointing to a bullish bias, while the Trade Weighted Index showed the kiwi advancing against a broad set of peers. Looking ahead, the currency may face consolidation near current levels, with traders eyeing whether NZD/USD can decisively clear the 0.59 barrier. Key catalysts will be US economic data shaping Fed expectations and domestic signals on trade and growth. While some forecasts see the kiwi softening into September, near-term momentum and broader risk sentiment suggest it retains scope for resilience if external conditions remain supportive.

Expected weekly trading range:

0.80 - 0.82

The Mexican peso ended last week with modest gains, supported by softer dollar sentiment after Powell’s dovish comments and sustained appetite for emerging-market currencies. USD/MXN held within a tight range, reflecting a stable but slightly peso-favourable bias, as markets weighed US rate-cut expectations against local economic fundamentals. Looking ahead, the peso’s direction will hinge on upcoming Mexican data releases, US payrolls and inflation figures, and any fresh policy cues from Banxico. Broader risk appetite will also be key, with the peso likely to remain resilient if global conditions favour carry trades and US dollar softness persists.

Expected weekly trading range:

13.38 - 13.78