The end of last week was bad day for the Greenback, as it failed to end the week higher against major currencies post July NFP release. Euro fly 0.4% above its nine months low against the USD, and USDJPY slipped from its four months high. Meanwhile, GBPUSD remained weak and traded flat in today's market.

The end of last week was bad day for the Greenback, as it failed to end the week higher against major currencies post July NFP release. Euro fly 0.4% above its nine months low against the USD, and USDJPY slipped from its four months high. Meanwhile, GBPUSD remained weak and traded flat in today's market.

 

FOMC Less Hawkish Than Expected

Last week's FOMC minutes revealed that the Fed is less sure about the economy than the market expected. QE tapering is still ongoing, but the US Dollar started to withdraw from its previous gains because statements within the minutes once again diminished hopes for sooner rate hike. Low inflation is no longer the Fed's main concern, but job market is still considered unstable. Furthermore, the minutes negatively influenced stocks and bonds, as it uncovered the Fed mediocre valuation of the US current economic recovery.

Hot on the heels of FOMC, disappointing July NFP numbers shocks the market and further dropped the US Dollar. US NFP for July 2014 is recorded at 209,000, lower than the expected 230,000 improvement and a worse record than June NFP that was 298,000. Add to that, unemployment rate rose from 6.1% to 6.2%, and wages remain stagnant.

 

Forex Market Unsure, Beware Correction On Major Pairs

This week, we will see less fundamental news from the US compared to the previous hectic week. However, interest rate speculation will still dominate major pair movements in the forex market, with ECB, BOE, and RBA leads the way. The three central banks are expected to hold their current rate, but ECB's Mario Draghi and RBA's Glenn Stevens are well-known for their penchant to disturb the forex market with the slightest comment, and BOE's Mark Carney comments is hoped to wake the GBP up.

EURUSDEURUSD On H1 Timeframe At 4 August 2014

Given the relatively high level of the EURUSD now (see the chart above), the chance for it to go higher and lower are equally good. It is possible that the EURUSD will stay in its current range around 1.34155-134415 before the ECB rate decision is out. The higher it goes though, will sharpen the decline that might follows ECB rate decision.

Meanwhile, the market is waiting for more hawkish comment from the BOE, but analysts are not expecting anything big out of BOE this week. Instead, other data scheduled to be released from the UK this week are generally expected to weaken, endanger the GBPUSD further. The AUDUSD too, is in precarious condition, and it is possible for it to record more losses. All in all, if everything is as predicted, then the USD might recover from its losses this week, but it will be determined by other countries' leading central banks announcements.