The recent stalling of the broad USD downtrend reflects shifting investor perceptions of the US economy, buoyed by resilient equities, higher yields, and optimism around fresh trade deals that could bolster both economic and fiscal prospects. While global trade tensions remain a risk following the July 9 deadline, markets seem convinced that President Trump will ultimately choose de-escalation. Notably, US equities have begun outperforming other G10 markets in USD terms, which could temper expectations of capital outflows and reduce bearish USD sentiment. Still, for the USD to stage a sustained recovery, markets will be looking for hawkish signals from the Fed and upside surprises in key economic data, especially June’s CPI figures, which could shape expectations around the Fed’s rate path amid ongoing debates about the inflationary effects of tariffs.

USD/CAD managed a modest rebound off sub-1.36 levels this week, driven largely by a tentative recovery in the broader USD, though sentiment toward the loonie has been dented by recent developments including the US announcement of a 50% tariff on copper imports, impacting Canada as its second-largest supplier, and PM Carney’s warning that new defense spending pledges could necessitate budget cuts elsewhere. The CAD now faces critical domestic tests, despite June labour report unexpectedly delivering better-than-expected results. Meanwhile, next Tuesday’s CPI release will be watched closely, to see if price pressures remain anchored around the BoC’s 3% target. Absent any significant surprises, USD/CAD is likely to remain guided by broader USD trends and developments in US-Canada trade talks ahead of the 21 July deadline.

Expected weekly trading range:

1.35 - 1.39

The euro remains under pressure against the dollar as markets await clarity on a potential US–EU trade deal, with expectations largely priced in and limited upside seen unless talks yield surprises. However, the single currency remains vulnerable to renewed tensions, particularly after President Trump’s threat of 200% tariffs on pharmaceutical imports, which could severely impact EU exporters and darken the economic outlook. Lingering trade risks with the US and China, combined with the euro’s still-elevated valuation, weigh on Eurozone net exports and growth prospects. Near-term focus will turn to the German ZEW survey and Eurozone inflation data, while speeches from ECB officials could sway sentiment, especially given that positioning indicators show the euro as the most overbought G10 currency and susceptible to profit-taking if data disappoints or the ECB strikes a more dovish tone.

Expected weekly trading range:

1.58 - 1.62

The pound remains among the worst-performing G10 currencies in July, pressured by concerns over the UK’s stalled welfare reforms, which could force tax hikes under PM Starmer, as well as a string of disappointing economic data that has cemented expectations for aggressive BoE rate cuts ahead. This backdrop has left GBP vulnerable amid the dollar’s broader rebound, while the contrast between a dovish BoE and a more neutral ECB has fueled further EUR/GBP gains. Looking to next week, investors will be closely watching UK CPI and employment data, as these will shape expectations for the BoE’s August meeting; signs of continued labour market weakness or easing inflation could reinforce the market’s dovish stance. Still, some pessimism is already priced in, leaving GBP looking undervalued against the euro, though less so versus the dollar.

Expected weekly trading range:

1.82 - 1.88

The yen has been the G10’s worst performer this past week, pressured by a resurgent USD. Weighing further on the JPY is Japan’s failure to secure a trade deal with the US before the July 9 deadline, coupled with President Trump’s decision to raise tariffs on Japanese goods slightly, which, while incremental, signals deeper uncertainty around future negotiations. With Japan’s Upper House election looming on July 20, political dynamics add another layer of risk; a poor showing for the LDP-Komeito coalition could fuel calls for fiscal stimulus and a return toward Abenomics, potentially dampening prospects for BoJ hikes and adding pressure on the yen. Meanwhile, upcoming US retail sales and CPI figures will be key in determining whether the dollar’s strength persists, while Japan’s own nationwide inflation data, expected to show only modest cooling, will be watched closely to gauge whether the BoJ retains scope for another hike later this year.

Expected weekly trading range:

106.08 - 109.30

The Swiss franc has remained strong in July, maintaining its outperformance despite generally supportive global risk appetite and higher developed-market yields. This resilience appears less surprising when viewed alongside the striking surge in the CHF’s share of global FX reserves in Q1, which jumped from USD 20 billion to USD 88 billion, driven largely by significant net CHF buying by central banks. These reserve purchases proved prescient ahead of Q2’s sharp gains, raising the possibility that other reserve managers could follow suit. Looking ahead, the franc may still require a resurgence in global trade or fiscal uncertainties to reverse its strength, particularly given a light domestic economic calendar in the coming week offering little catalyst for a pullback.

Expected weekly trading range:

0.57 - 0.59

The yuan held steady this week, with USD/CNY fluctuating between 7.164 and 7.182, as the currency continues to trade near 4-year lows on a trade-weighted basis despite a 1.3–1.5% gain against the dollar since April. The PBOC remains vigilant, carefully steering the yuan’s path to balance export competitiveness with financial stability, even surveying banks on views regarding dollar weakness. Meanwhile, Chinese corporates are actively hedging FX risk, boosting foreign currency deposits and swap activity near $1 trillion. Looking ahead, markets are eyeing the July 12 expiry of the US–China tariff pause, which could spark renewed volatility. While recent dollar softness has eased pressure, the PBOC’s firm guidance and cautious trade policy remain critical in anchoring the yuan’s trajectory.

Expected weekly trading range:

5.16 - 5.32

The rupee slipped this week, dropping from 85.50 to around 85.80 against USD, pressured by emerging US tariff threats and renewed foreign portfolio outflows that dampened sentiment. President Trump’s announcement of fresh levies, including 10% on BRICS goods, sparked broader dollar demand, pushing USD/INR briefly above 85.86, although RBI interventions via state-bank dollar sales helped limit losses and keep the pair below the 86 mark. Traders are eyeing US tariff developments and upcoming India-US trade talks, which could provide a boost if progress is made. Next week, markets will watch for further RBI action to stabilize the currency if volatility persists, especially amid global dollar strength and any fresh geopolitical tensions.

Expected weekly trading range:

61.75 - 63.63

The Australian dollar has held its ground thanks to the RBA’s surprise decision to keep rates on hold this week, even if it was a dovish pause with Governor Bullock signalling that further easing hinges on the Q2 inflation print due July 30. A trimmed mean CPI result of 0.7% QoQ or lower would likely guarantee a cut, but markets have pared back expectations from 75bp to around 50bp of easing by year-end, offering underlying support for the AUD. In the week ahead, traders will focus on June’s labour market report, where a rebound in employment and a potential dip in the jobless rate could challenge expectations for an August cut and provide upside risks for the currency. Internationally, US data and China’s mixed economic indicators will also shape sentiment, while traders remain vigilant for any fallout from Trump’s evolving tariff stance.

Expected weekly trading range:

0.89 - 0.91

The New Zealand dollar has maintained resilience as the RBNZ left the OCR unchanged at 3.25% this week, signalling further cuts are possible but hinting the easing cycle may pause. NZ’s economy is bouncing back robustly from recession, helped by earlier rate cuts, strong agricultural export prices, and surprisingly firm inflation trends expected to approach the top of the RBNZ’s 1–3% target band. These dynamics, coupled with a weak US dollar and favourable terms of trade, have prompted an upgrade to NZD/USD forecasts. Looking ahead, NZD traders will watch global risk sentiment, US data releases, and China’s economic prints, while also monitoring whether Trump’s tariff threats spill over to NZ exports, although so far New Zealand has stayed off Washington’s immediate target list.

Expected weekly trading range:

0.81 - 0.83

The peso, up over 13% year-to-date, stumbled this week as markets digested the expiry of the US tariff pause on July 9, fueling expectations for a roughly 5.5% slide over the next year toward 19.80 against USD. Despite the tariff cloud, volatility remained moderate, with Mexico’s USMCA protections offering a cushion against severe downside. The peso continues to benefit from attractive local interest rates, even as US rates soften, but traders remain wary of potential trade escalations and broader geopolitical ripples. Next week, the peso is likely to hover between 19.50 and 19.80 against USD, with eyes on US-Mexico trade developments, possible carve-outs under USMCA, and fresh domestic data that could steer sentiment.

Expected weekly trading range:

13.41 - 13.83