Dollar Faces Pivotal Week with Four Central Banks, Big Tech Earnings

One of the most consequential weeks of the quarter for FX markets is underway with a slightly softer dollar start, despite a packed calendar of potential volatility events. Four central bank meetings highlight the economic docket, with three clustered on Wednesday alone including the Federal Reserve, while supporting inflation data from the eurozone and Australia add further complexity. On the equity side, a massive earnings lineup featuring Amazon, Apple, Microsoft, Meta and Alphabet has significant potential to drive risk sentiment. Adding to the mix, President Trump's Asia tour culminates in a highly anticipated meeting with China's Xi Jinping, where impromptu headlines could either solidify recent diplomatic progress or reignite trade tensions.

Central Bank Bonanza

Wednesday's central bank marathon kicks off with the Bank of Canada at 9:45am EST, where a 25-basis point cut is expected amid ongoing tariff disputes that have kept USD/CAD hovering around 1.4000. The main event follows at 2pm EST with the FOMC decision, where a quarter-point cut appears certain but forward guidance remains murky due to limited economic data amid the government shutdown. Markets will scrutinize any shift in the Fed's 2026 rate outlook, with fewer anticipated cuts likely boosting the dollar while a more dovish stance could pressure the greenback. Powell's press conference an hour later warrants particular attention given recent patterns of initial fakeout moves reversing after his commentary. USD/JPY traders face a late night with the Bank of Japan decision at 11pm EST, where no rate change is expected but commentary could prove consequential given Japan's new political landscape. Thursday morning wraps up with the ECB at 9:15am EST, expected to hold steady after fresh eurozone GDP data.

AUD/USD in the spotlight

AUD/USD sits at the epicenter of this week's events, having already gapped higher over the weekend on reports of progress in U.S.-China negotiations. The aussie remains highly sensitive to Trump-Xi headlines given Australia's export dependence on China, with recent price action suggesting more upside potential if diplomatic momentum continues. Tuesday night's Australian inflation data at 8:30pm EST, where an uptick is expected, adds another catalyst. Beyond the FOMC's direct impact, mega-cap tech earnings could drive significant moves in AUD/USD through risk sentiment channels, as disappointing results would likely strengthen the dollar while boosting demand for safe havens over commodity currencies.

Takeaways 

For US dollar traders, this week presents multiple inflection points where established trends could either accelerate or reverse. The rapid succession of high-impact events may likely create opportunities for short-term traders and scalpers to capitalize on heightened volatility and wider trading ranges. For position traders, the convergence of central bank guidance, earnings results, and geopolitical developments could provide the confirmation needed to establish longer-term directional plays, particularly if the Fed's forward guidance or Trump-Xi negotiations spark sustained momentum. Wednesday's FOMC decision and Powell's subsequent commentary will likely serve as the week's primary catalyst, potentially igniting trends that extend well beyond this event-packed week.