UNITED STATES, AND USD
USD is neutral as cooling labour data and sluggish spending collide with persistent safe-haven flows and lingering inflation risks.
The US dollar continues to move sideways in a neutral channel. While soft employment growth and cooling consumer demand constrain upside potential, enduring inflationary pressure together with steady global safe-haven demand establish a firm price floor for the currency over the coming three weeks.
Why the US Dollar Is Stuck in Place
For the past few weeks, the US dollar has been stuck in a narrow range, pulled between two opposing economic forces. On one side, the data at home is looking weak. We saw a surprise drop of 23,000 jobs in July, retail sales are falling, and economic growth is coming in lower than expected. This slowdown suggests consumers are running out of steam, making it less likely the Federal Reserve will raise interest rates anytime soon.
Despite this weakness, the dollar isn’t falling apart. It’s holding steady thanks to persistent inflation and investors seeking a safe place for their money. With inflation still running at 3.4%, driven by higher energy costs and new tariffs, Treasury bond returns have stayed relatively high, which continues to attract investment.
Looking ahead, most market watchers expect the Federal Reserve to keep interest rates unchanged at their September meeting. The dollar will likely stay in its current range until we get a clear signal one way or the other—either a jump in inflation that forces the Fed to rethink its plans, or another poor jobs report that suggests the economy is hitting a wall. We’ll be watching the upcoming inflation and jobs reports closely for the next big move.
A side Note. Ever wonder why US currency is the color green? The colonials lacked faith in the 1st continental currency (tan colored), with the saying "it's not worth a continental". Read history here:
https://maryannmehegan.substack.com/p/why-are-us-dollars-green
The technical analysis here is sound. But there's a structural irony running through every bullish catalyst you've identified that's worth naming.
The Hormuz blockade drives oil above $110. That drives inflation. That drives yields higher. Higher Treasury yields mean higher interest payments on U.S. government bonds.
Now ask: who benefits from those interest payments?
USD1 - the private stablecoin issued by World Liberty Financial, in which Trump, his sons, and his chief diplomatic negotiator Steve Witkoff hold direct financial stakes - backs its reserves with U.S. Treasury bonds. The interest on those bonds, paid by American taxpayers, flows 75% into Trump and Witkoff family accounts. Every basis point of yield increase you're trading as a bullish dollar signal is simultaneously increasing the private seigniorage flowing to the family running the geopolitical crisis that generated it.
And Witkoff - the man negotiating America's position in the Middle East, the exact region where the Hormuz blockade is happening — is a direct financial beneficiary of the energy shock driving your thesis.
The safe-haven premium is real. The yield advantage is real. Your trade setup may well be correct.
But the dollar you're trading bullish is being quietly hollowed out from the inside. The question isn't whether the dollar strengthens in the next few weeks. It's whether the institution behind it still exists in the form you're pricing in.