The global foreign exchange market traded with a firmer US dollar, a weaker Japanese yen and mixed commodity currencies on Friday, July 31.
The US Dollar Index returned to around 100 as the Federal Reserve kept interest rates unchanged and US inflation remained above target. The yen failed to sustain a recovery following the Bank of Japan's decision to maintain its policy rate at approximately 1.0%.
Data note: Prices are intraday indications as of approximately 3:15 p.m. Beijing/Malaysia time on July 31, 2026. They are not final New York closing prices, and quotations may differ slightly across platforms.
Market Overview
| Index or Pair | Intraday Level | Daily Change |
|---|---|---|
| US Dollar Index DXY | Around 100.01 | +0.29% |
| EUR/USD | Around 1.1515 | -0.11% |
| GBP/USD | Around 1.3453 | -0.10% |
| USD/JPY | Around 160.3 | About +0.3% |
| AUD/USD | Around 0.7033 | +0.19% |
| USD/CAD | Around 1.4014 | +0.02% |
| USD/CNH | Around 6.7428 | Range-bound |
| USD/MYR | Around 4.0871 | +0.30% |
A rise in USD/JPY represents yen weakness, while a rise in USD/MYR represents ringgit weakness against the US dollar.
Global Policy Background
1. Federal Reserve Keeps Rates Unchanged
The Federal Reserve maintained the federal funds target range at 3.50%-3.75% at its July 29 meeting. Nine officials supported the decision, while three preferred a 25-basis-point increase, indicating continued disagreement over inflation risks.
The US PCE Price Index increased 3.7% year on year in June, down from 4.1% in May but still above the Fed's 2% target. This has prevented markets from fully pricing in near-term rate cuts. Federal Reserve meeting report; US Bureau of Economic Analysis PCE data
2. Bank of Japan Maintains a 1.0% Policy Rate
The Bank of Japan's July 31 statement maintained its guideline for the uncollateralised overnight call rate at around 1.0%.
The yen remains affected by the US-Japan interest-rate differential and Japan's exposure to imported energy costs. Bank of Japan monetary policy statements
3. European Central Bank Leaves Rates Unchanged
The European Central Bank kept policy rates unchanged on July 23, with the deposit facility rate at approximately 2.25%. The ECB continues to balance inflation risks against subdued regional growth. ECB monetary policy decision
Major Currency Performance
US Dollar: Retesting the 100 Level
The Dollar Index rose approximately 0.29% to 100.01. Sticky US inflation, the Fed's decision to delay rate cuts and month-end dollar demand supported the currency.
The current move still resembles a range rebound rather than a confirmed new dollar uptrend.
Euro and Sterling: Modest Pullback
EUR/USD eased to around 1.1515 after gains earlier in the week. The euro remained relatively resilient over July.
GBP/USD slipped to approximately 1.3453. Sterling's next direction will depend on UK inflation, wage growth and Bank of England policy expectations.
Japanese Yen: Elevated Volatility Continues
USD/JPY returned to around 160.3, placing renewed pressure on the yen. The BOJ's unchanged policy and the still-wide yield gap between Japan and the United States continue to limit sustained yen appreciation.
Intervention sensitivity is high at these levels. However, sudden intraday moves should not be described as confirmed intervention until Japan's authorities publish official information.
Malaysian Ringgit: Slightly Weaker
USD/MYR traded near 4.0871, approximately 0.30% higher on the day. The pair moved within an intraday range of roughly 4.0750-4.0925.
The dollar rebound pressured the ringgit, while Malaysian export earnings, domestic interest rates and regional capital flows continued to provide underlying support.
Australian and Canadian Dollars: Mixed Performance
AUD/USD rose to around 0.7033, supported by risk appetite and commodity-market sentiment.
USD/CAD was nearly unchanged at approximately 1.4014. The Canadian dollar remained influenced by both US dollar movements and crude oil prices.
Currencies to Watch
| Currency Pair | Main Reason |
|---|---|
| DXY | Test of the 100.5-101.1 resistance area |
| EUR/USD | Direct reflection of ECB and Fed policy expectations |
| USD/JPY | Interest-rate differential and intervention risk |
| USD/MYR | Ringgit sentiment and regional capital flows |
| USD/CNH | Chinese economic data and currency policy signals |
| AUD/USD | Global risk sentiment and the commodity cycle |
Market Drivers
US Inflation and Federal Reserve Policy
Inflation is moderating but remains above target, preserving the dollar's interest-rate advantage.
Japanese Intervention Risk
USD/JPY above 160 increases sensitivity to official warnings and possible government action.
European Economic Data
Euro performance will depend on inflation, manufacturing activity and the ECB policy path.
China and the Asian Economic Outlook
The yuan, ringgit and Australian dollar remain sensitive to Chinese growth and regional capital flows.
Energy and Commodity Prices
Oil prices affect the Canadian dollar and ringgit, while metals and Chinese demand expectations influence the Australian dollar.
Short-Term Outlook
| Instrument | Reference Support | Reference Resistance |
|---|---|---|
| US Dollar Index | 99.70 / 99.00 | 100.50 / 101.10 |
| EUR/USD | 1.1500 / 1.1430 | 1.1535 / 1.1600 |
| GBP/USD | 1.3440 / 1.3370 | 1.3480 / 1.3550 |
| USD/JPY | 159.00 / 158.00 | 161.50 / 163.00 |
| AUD/USD | 0.7000 / 0.6950 | 0.7040 / 0.7100 |
| USD/MYR | 4.0750 / 4.0500 | 4.0930 / 4.1000 |
The Dollar Index may consolidate between 99.70 and 100.50 in the near term. Stronger US data could push it toward 101, while further inflation moderation could send it back below 100.
USD/JPY remains one of the highest-risk major currency pairs because its movement is influenced by both interest-rate differentials and potential Japanese intervention.
For market observation only; not investment advice.