The dollar staged a notable comeback, with a sharp rally occurring during the low-liquidity period between U.S. equity close and Japanese markets opening. USD/JPY bounced strongly from the 140 level to reach 143 within 48 hours, while EUR/USD briefly dropped 100 pips from 114.20 to 113.15 before recovering.

The carry trade remains particularly relevant in today's changing interest rate environment. When traders go long USD/JPY, they receive the higher U.S. interest rate while paying Japan's lower rate, potentially earning around 4% annually on the differential. Wednesday rolls are significant, offering approximately 4 pips on USD/JPY positions due to the three-day weekend funding calculation.

Traders must consider that price movement risk can quickly overwhelm carry trade profits, especially in volatile markets.