Should we be wary of the upside potential for the U.S. dollar, which has been strengthening since the end of the long holiday weekend?

Should we be wary of the upside potential for the U.S. dollar, which has been strengthening since the end of the long holiday weekend?

08.07.2025

In the previous day’s U.S. currency trading, the U.S. dollar reached its strongest level since the holiday break during U.S. trading hours. The USD/JPY pair rose by approximately 2 yen, from 144.232 to 146.246. A band walk was observed along the +2σ line of the hourly Bollinger Bands.On the 4-hour chart, the RSI rose to 72. On the daily chart, the pair broke decisively above the consolidation range in the 145 yen level. We will need to monitor the direction closely to see if the US dollar’s momentum holds.

Among European currencies, the pound was the second-strongest after the U.S. dollar. The GBP/JPY pair rose from 196.772 to 199.001, rebounding from the 200-period EMA on the hourly chart. It also rebounded and rose on the 4-hour chart, just as it did on the hourly chart, and on the daily chart, it hit a new high for the year. The price has recovered to its highest level since December 30, 2024.We will need to watch for the potential for further upside as we monitor whether the pound continues to rise against the yen during today’s European trading session.

Today’s economic indicators include Japan’s balance of payments at 8:50, Australia’s NAB Business Confidence at 10:30, the RBA policy rate and statement at 13:30, Japan’s Tankan Survey at 14:00, RBA Governor Block’s press conference at 14:30, Germany’sGerman trade balance at 11:00 PM, remarks by German Bundesbank President Nagel and the Canadian Ivey PMI at 11:00 PM, a U.S. 3-year Treasury auction at 2:00 AM, and U.S. consumer credit data at 4:00 AM. We should remain cautious about the upside potential of the U.S. dollar, which has been firming since the holiday break.