The US dollar got a small lift despite a blockbuster Chicago PMI with USD/JPY touching a session high at 104.04 from about 103.99.

The real story is the inability of the US dollar to rally on good news this week. It’s one of three things (or a combination):

  1. The US dollar has moved too far, too fast over the past 7 weeks
  2. The dollar doesn’t want to move higher until it gets a hawkish signal from the Fed
  3. Month end flows are favoring US dollar weakness