Forex News Today August 5: Dollar Falls as Yen Leads Weekly Currency Gains

Key Takeaways

• The US Dollar declined against all seven major currencies over the latest rolling one-week period, falling most sharply against the Japanese Yen.
• Improving prospects for a US-Iran agreement over the Strait of Hormuz lifted risk appetite and drove oil prices sharply lower.
• Traders are awaiting US ADP employment and ISM Services PMI data before Friday’s Nonfarm Payrolls report.

Risk-sensitive assets advanced on Wednesday, August 5, as optimism over a possible diplomatic breakthrough in the Middle East reduced demand for the safe-haven US Dollar. The latest foreign-exchange performance data showed broad weakness in the greenback, while the Japanese Yen recorded the strongest relative gain among major currencies.

Oil’s sharp decline also helped ease near-term inflation concerns, supporting equities, precious metals and higher-risk currencies. However, the Dollar’s next move may depend heavily on upcoming US labor-market and services-sector data.

Dollar Weakens Against Every Major Currency

Rolling one-week mid-market data updated at 07:23 BST showed the Dollar losing ground against all seven currencies included in the major-currency heatmap.

The greenback fell 3.75% against the Japanese Yen, its largest decline in the group. It also weakened 1.54% against the New Zealand Dollar, 1.35% against the Swiss Franc, 1.30% against the Euro and 1.26% against the British Pound.

Losses were comparatively smaller against the Australian and Canadian Dollars, at 1.03% and 0.21%, respectively. The figures indicate that recent Dollar weakness has extended beyond individual currency pairs and developed into a broader market trend.

The Yen’s weekly outperformance followed heightened attention on Japanese currency policy. Despite the wider move, USD/JPY recovered somewhat on Tuesday and was consolidating below 158.00 during Wednesday’s European session.

Hormuz Deal Hopes Push Oil Lower

A more positive market mood emerged after US officials suggested that an agreement with Iran over navigation through the Strait of Hormuz could be reached soon.

The waterway is a critical route for global energy shipments, and recent disruptions had raised concerns about supply shortages and further attacks on Middle Eastern energy infrastructure. Those fears eased after US Treasury Secretary Scott Bessent indicated that a deal might be possible within days.

WTI crude oil dropped nearly 6% on Tuesday before stabilizing around $74 per barrel early Wednesday. Brent also fell below $80 as traders reduced the geopolitical risk premium embedded in energy prices.

Lower oil prices may ease inflation expectations by reducing transportation and production costs. That prospect supported risk appetite and weakened demand for the Dollar as a defensive asset. The Dow Jones Industrial Average and S&P 500 both closed at record highs on Tuesday, while the US Dollar Index remained below 100.00 on Wednesday morning.

EUR/USD and GBP/USD Hold Their Gains

EUR/USD traded above 1.1530 after gaining approximately 0.2% on Tuesday and reversing its decline from the beginning of the week. Investors were also preparing for the release of Eurozone producer-price data, which could provide further evidence about inflation pressures facing the European Central Bank.

GBP/USD remained close to 1.3450 after posting moderate gains in the previous session. The Pound benefited from the Dollar’s reduced safe-haven appeal, although traders avoided aggressive positions ahead of the upcoming US economic releases.

The New Zealand Dollar presented a more mixed picture. NZD/USD remained 1.54% higher over the rolling one-week period, but the pair fell toward 0.5870 on Wednesday after New Zealand’s second-quarter unemployment rate rose to 5.6%. The market had expected it to remain at 5.4%.

Gold also benefited from the decline in oil prices and the softer Dollar, rising more than 2% to trade near $4,170.

US Employment and Services Data Take Center Stage

Attention now turns to the July ADP private-sector employment report and the ISM Services PMI. The services report is scheduled for August 5 under the institute’s official 2026 release calendar.

The ADP report offers a high-frequency assessment of private employment based on anonymized payroll information covering more than 26 million US workers.

Stronger employment or services data could revive expectations that the Federal Reserve will keep monetary policy restrictive, potentially supporting the Dollar and Treasury yields. Weak readings would reinforce concerns about slowing US growth and could extend the greenback’s decline.

Friday’s Nonfarm Payrolls report remains the week’s most important scheduled catalyst. Until then, forex news today is likely to remain driven by Middle East negotiations, oil-price movements and shifting expectations for Federal Reserve policy.