The dollar is now on the backfoot again but it's not as bad as it looks. At least not compared to when we saw the rout two weeks ago. EUR/USD is still down 0.3% on the week and I reckon that there is scope for the euro to soften, especially if the ECB doesn't deliver on anything to reassure markets of a September rate hike - which I would pin as the baseline for today.

GBP/USD is in a better spot as it pushes back above its 200-week moving average of 1.2888 but can buyers pull through to crack above 1.3000 again? Meanwhile, USD/JPY is also under intense scrutiny right now with the BOJ coming up tomorrow. The pair is seeing some swingy action today with the earlier low touching 139.40 but is trading back up to 140.20 currently.

Oh, and let's not forget that there is also month-end flows to potentially add to the volatility in the sessions ahead. That doesn't make it too easy and straightforward to read into any reactions after the ECB today.

But on the balance of things, I still think the dollar should be able to hold its ground - more so against the euro especially. The aussie and kiwi may find it tough to gather too much upside momentum as well, despite a stronger Chinese yuan. The odds of a RBA rate hike next week are dwindling and with a record rate differential between the US and Australia in favour of the former, that's a strong reason for the dollar to hold firmer at least.

Besides that, I still like gold longs in the bigger picture and the Fed decision yesterday continues to reaffirm that narrative. And stocks should continue to benefit as well from a more structural perspective, with the AI boom set to drive further gains through to next year - barring any major economic hiccups.

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