King dollar: the central-bank week in review

It's rare for so many monetary-policy decisions to land in a single week. When they do, the currency market moves. Here's what happened —and, more importantly, what each move means— in plain language.

The headline: the dollar at a one-year-plus high

The US Dollar Index (DXY) firmed near 100.80, a level it hadn't seen since May 2025. In practice, that meant pressure on almost every major currency against the greenback.

The trigger? The Federal Reserve.

The Fed set the tone

The Fed left rates unchanged in the 3.50%–3.75% range —the first policy meeting with Kevin Warsh as Chair. Holding surprised no one; what moved the market was the tone: investors read it as hawkish, i.e. a Fed in less of a hurry to cut than expected.

Why it matters for forex: when a central bank signals it will keep rates higher for longer, its currency tends to strengthen, because it offers a higher relative yield. Higher rates = more demand for the dollar. That was the engine of the whole week.

The backdrop helped: the Atlanta Fed's GDPNow model put second-quarter growth at 3.0%, and the Philadelphia Fed manufacturing index swung back into positive territory. A solid economy reinforces the dollar's case.

Everyone else lagged

While the Fed held its stance, the other central banks didn't follow:

• Bank of England (BoE): held rates, as expected.
• Swiss National Bank (SNB), Norges Bank, Riksbank: all on pause.
• ECB (euro area): the exception. Lane reiterated that further hikes remain justified.

This rate divergence —the Fed firm, the rest on hold— is exactly what widens yield gaps between currencies, and with them the moves in the pairs.

Winners and losers, currency by currency

• Pound (GBP): fell to its lowest since April. The BoE hold, against a tougher Fed, left sterling unsupported.
• Euro (EUR): touched a two-month low during the week despite the ECB's firm tone —the dollar weighed more. On Friday it bounced back above 1.1450 after news of an initial US-Iran agreement.
• Yen (JPY): USD/JPY brushed 161.80, its highest since July 2024. The yen then clawed back some ground on bets for further Bank of Japan hikes (board member Himino pointed to more increases) and slightly softer inflation. Watch the intervention risk at these levels.
• Canadian dollar (CAD): at a 14-month low, hit by the Fed and weaker oil.
• Swiss franc (CHF): USD/CHF set a new year-to-date high above 0.8050.
• Gold: slipped toward $4,200, pressured by a strong dollar —gold and the greenback usually move in opposite directions.

The backdrop: geopolitics and oil

Into the mix came an initial US-Iran agreement to wind down the conflict, which moved oil and gave the euro some breathing room. Geopolitics remains a variable that can flip the market's mood within hours.

Bottom line

The week sent a clear message: a firm Fed + everyone else on hold = a strong dollar. Understanding why currencies move —rate gaps, central-bank tone, the economic backdrop— is worth more than trying to guess the next move.

If you want to learn how to navigate weeks like this —packed with announcements and volatility— take a look at our guide on how to trade economic calendar news.

And to keep an eye on what's coming and with what impact, having the economic calendar and news risk in plain sight is the first step to deciding with a clear head.