The US Dollar (USD) has traded in a volatile fashion this week, leaving the US Dollar Index (DXY) slightly positive around the 101.00 neighbourhood.

The EUR/USD pair finishes an uneventful week unchanged, just a handful of pips above the 1.1400 mark. Financial markets held cautiously throughout the week, trapped between little macroeconomic guidance and tensions in the Middle East.

Gold (XAU/USD) lost its bullish momentum after rising more than 2% in the previous week and registered weekly losses as investors reacted to a clear re-escalation of tensions in the Middle East.

Gold is defending the $4,100 level early Friday, trying hard to capitalize on this week’s rebound from four-day lows of $4,022 even as tensions in the Middle East appear to have somewhat eased.

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in.

Japan may be changing its intervention playbook, but that might not be enough to rescue the battered Yen. With USD/JPY hovering at four-decade highs, the currency’s weakness is being driven less by speculative pressure and more by a powerful structural force: the wide US-Japan rate gap.