Currency Report: Hitting the Four Corners

The weak-dollar trend remains intact. But when counter-trends happen, they usually start under the hood. 

The Dollar Index $DXY is just a basket, so when we want hints as to the next move, we pop it open and check the parts.

Across the four majors that drive the index—Euro, Yen, Pound, and Loonie—we’re seeing tactical distribution. 

The Euro and Pound are the sturdier lids; the Yen has been the soft spot all cycle; and the Canadian Dollar is beginning to slip. 

Here they are the four corners: 

If those shelves crack in unison, the Greenback can squeeze higher tactically even while the bigger trend remains lower.

Here’s the tactical read across the four largest DXY components.

First up is the Euro at 57.6% of DXY.  This is our linchpin: 

Although EUR is the strongest of the group, it’s carving out a short-term distribution pattern. 

The first line to watch is 1.1500. Lose that level and you open the door toward 1.1250.

As long as EUR/USD holds above 1.125, any dollar bounce is likely to be fleeting. If it breaks, DXY gets a real tailwind.

Up next is the Japanese Yen at 13.6% of DXY. This is our persistent laggard:

Price has already broken below the critical 0.00662 level. 

If it fails to reclaim this line, a continued slide could set the stage for a tactical dollar pop

Laggards lagging is nothing new. If the majors break, this will be the culprit. 

The third setup today is the British pound at 11.9% of DXY. This one’s showing relative strength: 

The British pound looks more like the Euro than the Yen—firm but rolling.

1.3145 is the line in the sand. 

Above it, dollar rallies struggle; below it, sterling confirms a near-term top and helps DXY.

Last but not least is the Loonie. This is Canadian Dollar at 9.1% of DXY — already cracking: 

CAD has slipped beneath ~0.715. That’s your breakdown level. 

Below, we have a shelf of support near 0.70 that could act as potential support.

Staying sub 0.715  argues for further CAD weakness and adds fuel to any short-term dollar bounce.

So what?

These are tactical distribution patterns across the Dollar Index basket. We already highlighted our key levels for the DXY a few weeks ago.

If Euro and Pound lose their shelves, with CAD already below and Yen feeling heavy, the dollar likely squeezes higher near term. 

If those shelves hold and turn up, the bounce fizzles and the weak-dollar trend reasserts quickly. 

Big picture, nothing’s changed: the primary trend for the dollar remains lower. Until the DXY can reclaim its major resistance zones, we’ll continue to favor the weak-dollar playbook while respecting the potential for a short, sharp counter-trend rip if these key FX levels fail.