US FX WRAP: Dollar trims WTD gains; EUR, CAD, GBP lead gains

DXY was a touch weaker on Friday, though it closed higher on the week as risk-taking took a step back across global equities. Currency-specific newsflow was light with the final revisions to the UoM June report sending mixed signals; sentiment and expectations revised higher while conditions revised down. Adding pressure to the dollar today was the decline in US yields, particularly on the short-end amid the relentless drop in oil prices, as markets keep their optimistic view of a smooth return to pre-war oil flows in the Strait of Hormuz. From the Fed, 2026 voter Kashkari confirmed his dot plot on rates, seeing one hike in 2026, then holding through 2027; he remains concerned about inflation.

EUR, GBP, and CAD saw modest strength against the greenback; meanwhile, Antipodes traded with marginal weakness. USD/JPY traded within another tight range; the currency pair remains around 161.75, near the closely watched 161.95 resistance level. Overnight, Tokyo CPI, which is seen as a forward looking indicator for the nationwide reading, matched expectations for the core and headline Y/Y.

EUR/USD saw a slight bounce to end the week, yet ultimately traded lower from last Friday. Today, Trump threatened countries, particularly EU states, with 100% tariffs if they impose a Digital Services Tax on US companies; EUR/USD was weighed by the Truth Social post. At BofA, they expect the ECB to deliver its next hike in September 2026 (prev. saw July).