The Dollar ducks as rate cut fever spreads and one soft NFP print away from freefall

Oh well, it’s another Monday and you know what that means, the dollar is on its back foot to start the week—not because the CBO says the US deficit will balloon (we’re all numb to trillion-dollar taboos at this point), but because the market is punch drunk on rate cut euphoria. Futures are fully loaded for a September cut and even pricing a 20% chance for July. That’s aggressive, especially with FOMC speakers still pretending they’re watching the data instead of their political six.

In addition to the rate-cut narrative, global growth optimism is starting to regain momentum. A whiff of real progress on trade deals—especially with the July 9 tariff clock ticking—has traders dusting off their old reflation playbooks. If this trade deal momentum holds, risk appetite gets a booster shot, global currencies catch a bid, and the dollar finds itself on the wrong side of the rotation.

Thursday’s payrolls is the main event. Consensus is 113k, but the whisper number is sliding, and while anything near 100k call probably won’t light the July-cut fire on its own, but below could. But, in this sell-the-dollar mood, disappointment doesn’t need to be catastrophic to crush the dollar further. A weak NFP could shove DXY below 96.0, even without OBBBA fireworks or tariff drama.

As expected, the yen is enjoying a catch-up move to start the week as dollar weakness persists. But let’s be clear: the real FX volatility juice this week still comes from the US data side of the equation. ISM and JOLTS are scheduled to drop tomorrow, ADP is on Wednesday, and all eyes are on the NFP.

EUR/USD: Waiting for the wind to catch the sails

EUR/USD has been teasing a breakout, but with the Fed looking more like a political football, the path to 1.20 suddenly feels less like fantasy and more like a question of timing.

The euro’s gains aren’t being driven by its own engine—this is a carry-on dollar weakness trip. But that could change with this week’s eurozone CPI prints. German inflation data is already trickling in, and while the uptick to 2.2% is mild, any sustained rise would muddy the ECB’s December-cut story. The 2-year EUR-USD swap spread has already narrowed by 30bp since May, helping EUR/USD sneak higher, but it may not have much more juice if the ECB sticks to its “sit back and watch” Sintra stance.

The wildcard remains U.S. data. If payrolls deliver a dud and markets double down on the “rate cuts now, deficits later” narrative, EUR/USD could quickly punch through resistance and make a run at 1.2000. My base case still sees this summer rally fizzling out once the Fed repricing reverts to reality, taking EUR/USD back to the 1.15–1.16 gravity zone.

Bottom line: It’s not quite a break-glass moment, but with tariffs, taxes, and Treasury tantrums all converging, this week could set the tone for FX for the rest of the quarter. Stay nimble, and don’t believe the dollar death crowd just yet—it still has a few counterpunches left.

Supply surge, demand purge: Oil's staircase to nowhere

Oil’s losing streak is starting to look less like a healthy pullback and more like a full-blown capitulation trade. What’s really spooking the tape now is OPEC+ playing offense. Rumours are swirling that the cartel is eyeing another 411,000 bpd hike for August, which would make it four straight months of aggressive taps-turning. It’s no longer about balancing the market—it’s about defending market share in a world where demand is crawling and barrels are plenty. Even with China’s factory data hinting at a heartbeat, the broader consumption pulse remains faint. And let’s not forget the fog of trade war 2.0, with tariff deadlines and Washington’s economic kabuki theater keeping the macro tone murky. In this setup, oil’s not just slipping on supply worries—it’s tumbling down a staircase of uncertainty.