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The forex major pairs are entering a week where one Fed event can completely change the technical picture. The U.S. dollar is sitting near multi-month lows, while EUR/USD and GBP/USD remain close to recent highs. USD/JPY is showing a different structure as yen strength starts to matter again. My current bias is mildly bearish on the dollar, but I am not chasing weakness blindly. The real test comes when PCE inflation and the Jackson Hole message hit the market.
I noticed something interesting when I compared the major pairs this morning. The dollar is weak, but Treasury yields are still elevated. That tells me this is not a simple “Fed cuts = dollar falls” trade. There is a bigger fight between fiscal risk, inflation expectations, bond yields and Fed policy.
The Dollar Is Weak, But the Setup Is Not Risk-Free
The Dollar Index has been under pressure after another weak week for the greenback. Recent market data showed the dollar falling against the euro, pound, Australian dollar and yen, with EUR/USD closing the previous week around 1.1679 and GBP/USD around 1.3634. USD/JPY finished near 158.95. The broad move confirms that dollar selling is not limited to one currency pair.
That matters because a broad USD decline usually creates cleaner technical setups across several major pairs. But I would still avoid assuming that every dollar pair must move in the same direction. Relative central-bank expectations can create major divergences.
For example, EUR/USD can remain strong while USD/JPY becomes volatile rather than simply bearish. GBP/USD can push higher while USD/CAD behaves differently because Canadian-dollar flows are also being affected by trade and commodity factors.
That is why I am treating this week as a pair-selection week, not a “sell USD everywhere” week.
EUR/USD Technical Structure: Bulls Have the Cleaner Setup
EUR/USD is currently one of the cleaner major-pair charts. The pair climbed from a weekly low near 1.1562 to a high around 1.1712 last week before closing near 1.1679. That move shows that buyers are still willing to defend dips rather than immediately exit at higher prices.
My first technical focus is the 1.1700–1.1715 resistance area. A clean daily close above that zone would improve the bullish continuation case. I would rather see price break, retest and hold than chase a large green candle.
On the downside, 1.1600–1.1560 becomes the important defensive area. If EUR/USD drops back below that zone, the recent bullish structure starts looking much weaker.
There is also a psychological trap here. Traders who missed the first rally may jump into EUR/USD after a resistance break. That can create a FOMO entry exactly where larger players start taking liquidity.
I prefer waiting for the retest. If the old resistance becomes support during the New York session, that would give me much more confidence than a simple intraday spike.
For readers tracking the pair’s broader structure, the earlier EUR/USD and DXY outlook also provides useful context for understanding the relationship between euro strength and dollar weakness.
GBP/USD: Breakout Momentum Meets Resistance
GBP/USD is arguably the most aggressive dollar-short setup among the traditional majors. The pair reached around 1.3677 last week after starting the week near 1.3518. That is a meaningful move and shows that pound buyers have been comfortable buying higher levels.
But this is exactly where I become cautious.
When a pair reaches a fresh multi-month high, late buyers often become liquidity for a pullback. A fast rejection from the highs could trigger a liquidity sweep before the next real directional move begins.
My bullish trigger remains a sustained move above the recent high, ideally followed by a controlled retest. If that happens, the market would be showing genuine acceptance rather than a temporary spike.
If GBP/USD instead loses the 1.3500–1.3520 area, the short-term bullish structure would need to be reassessed. That would not automatically mean a major reversal, but it would warn me that dollar sellers are losing control.
I have learned to be careful with GBP/USD around major events. The pair can move aggressively during the London session and then completely reverse once New York liquidity enters. That is why I do not want to place a trade simply because the daily chart looks bullish.
USD/JPY: The Pair That Can Break the Dollar Weakness Pattern
USD/JPY is different from EUR/USD and GBP/USD because the yen has its own macro story. The pair ended last week around 158.95, down from the previous week's 159.32. Japanese inflation has also moved higher, keeping attention on potential Bank of Japan policy adjustments.
Technically, the key question is whether USD/JPY can reclaim the 159.00–160.00 zone or starts building a lower-high structure beneath it.
If sellers keep defending 159.00–160.00, I would favour a bearish setup toward lower support zones. A confirmed breakdown would be more interesting than simply shorting into support.
But there is another risk. If U.S. yields jump after a hawkish Jackson Hole message, USD/JPY could reverse sharply upward even while EUR/USD remains relatively strong. That is the kind of cross-market divergence I want to respect.
My personal rule here is simple: do not short USD/JPY only because the dollar is weak. Watch Treasury yields and the yen structure together.
The existing USD/JPY rising-channel setup is also useful background for understanding how quickly the pair can transition between continuation and reversal phases.
What Jackson Hole Could Do to Major Forex Pairs
The Jackson Hole symposium is scheduled for August 27–29, 2026. This makes the second half of the week much more dangerous for traders holding directional positions. The event itself matters, but the bigger issue is how traders interpret the Fed's policy message.
If the Fed sounds more concerned about inflation and keeps the door open to tighter policy, the dollar could experience a sharp short-covering rally. EUR/USD and GBP/USD would then face immediate downside pressure, while USD/JPY could regain momentum.
On the other hand, if the message reinforces expectations for easier policy, the existing dollar-selling trend could accelerate.
There is also a third possibility: the Fed delivers a balanced message and the market focuses more heavily on the upcoming inflation numbers. In that situation, technical levels may control the first move.
That is why I would not try to predict the Jackson Hole candle. I want the market to show me the reaction first.
US July PCE inflation is another major catalyst this week because traders use the data to reassess the Fed's policy path. A hotter-than-expected inflation reading could push yields higher and support the dollar, while softer inflation could reinforce the current dollar weakness.
For the macro background, Reuters' dollar market report highlights the current pressure on the greenback and the broader fiscal and bond-market concerns affecting currency sentiment.
My Major-Pairs Trading Bias This Week
My current directional bias is mildly bearish on USD, but with confirmation required. EUR/USD and GBP/USD have the strongest upside structures, while USD/JPY has the most interesting two-way risk.
For EUR/USD, I want to see buyers defend the breakout area rather than simply chase highs. For GBP/USD, I am watching whether the recent high becomes a genuine breakout or a retail trap.
For USD/JPY, I want confirmation from both price and Treasury yields. If yields rise aggressively, the bearish USD/JPY setup becomes much less attractive.
I also would not ignore USD/CAD. Broad dollar weakness can push the pair lower, but Canadian-dollar sensitivity to trade developments and oil can create sudden reversals. That pair needs its own confirmation.
This is where smart money versus retail behaviour becomes important. Retail traders often see a strong dollar trend and enter after the move has already happened. Larger players may wait for the liquidity sweep, then use the event-driven volatility to enter at better prices.
The Setup I Would Avoid
I would avoid entering a major pair immediately before the Jackson Hole speech simply because the technical chart looks perfect. Event risk can destroy a clean setup within seconds.
I would also avoid placing a stop exactly around obvious swing highs or lows without considering volatility. Those areas are natural targets for stop hunting.
Honestly, this is the part of the week that makes me nervous. The market can give a beautiful breakout, attract traders, sweep the opposite side and only then choose the real direction.
My preferred approach is to let the first volatility wave happen, then watch the retest. A clean structure after the event is usually more valuable than trying to predict the headline reaction.
Traders who want to monitor the broader dollar environment can also use the site's live forex charts before the London and New York sessions to compare the major pairs together.
Risk Scenario: What Would Change My View?
My bearish-dollar view would weaken if DXY starts recovering strongly from its current depressed levels while Treasury yields continue climbing. A hawkish Fed message could create exactly that combination.
For EUR/USD and GBP/USD, a failed breakout followed by a break of recent swing support would tell me that buyers have lost control. For USD/JPY, a decisive move back above the psychological 160.00 area would force me to reassess the bearish setup.
The opposite scenario is also clear. If DXY remains weak, yields stop accelerating higher and EUR/USD or GBP/USD successfully hold breakout retests, the dollar-downside structure becomes much stronger.
So my plan is not based on one prediction. It is based on reaction + confirmation + risk control.
Final Forex Bias
The current forex major pairs structure still favours dollar weakness, but this is not the week to become emotionally attached to one direction. EUR/USD and GBP/USD remain the cleaner bullish candidates, while USD/JPY needs yield confirmation before taking a strong bearish view.
Jackson Hole can change the entire short-term structure. My bias stays mildly bearish on USD until price and macro data prove otherwise.
I will be watching the reaction rather than guessing the headline. If the breakout holds after the volatility, I will trust it. If the market sweeps both sides, I will wait.
That patience matters more this week than finding the perfect prediction. Check the structure before the New York open, respect the liquidity zones, and let confirmation decide the trade.
Forex Major Pairs FAQ
1. Which forex major pair has the strongest bullish setup?
EUR/USD and GBP/USD currently offer the clearest bullish structures while the dollar remains under pressure. Confirmation above recent highs is still necessary.
2. Can Jackson Hole reverse the dollar trend?
Yes. A hawkish Fed message could trigger a dollar short-covering rally, while a dovish or softer message could extend the existing USD weakness.
3. Should traders buy EUR/USD and GBP/USD before Jackson Hole?
Not automatically. Event volatility can create fake breakouts and liquidity sweeps. Waiting for a confirmed breakout and retest can reduce the risk of chasing the initial move.
