USD strength continues to dominate the currency markets, fuelled by fresh U.S. economic data that exceeded expectations. This combination has added pressure to major pairs like EUR/USD and GBP/USD, as investors react to shifting interest rate expectations and macroeconomic momentum.
In recent sessions, key U.S. data points have painted a picture of economic vigour. Retail sales, jobless claims, and core inflation figures have all met or exceeded forecasts. This data mix has given the dollar strong footing. Traders are now reassessing the likelihood of near-term rate cuts by the Fed. As a result, U.S. Treasury yields have stayed elevated, offering further support to the greenback.
EUR/USD Falls on Dollar Strength
EUR/USD has borne the brunt of this USD strength, slipping steadily. The interest rate divergence between the Fed and the European Central Bank has widened. While the Fed maintains a steady tone on inflation, the ECB seems increasingly open to rate cuts amid eurozone weakness. This contrast has tilted EUR/USD lower. Traders are watching key support levels around 1.0800 and 1.0750.
GBP/USD Under Pressure from Strong USD
GBP/USD has also faced downward pressure, though the pound has been more resilient than the euro. The Bank of England’s tone remains hawkish due to stubborn UK inflation. However, any signs of economic slowdown or dovish commentary could weaken the pair. If U.S. data continues to outperform, it may extend USD gains further against GBP.
Technical View Supports USD Trend
The dollar index (DXY) remains in a bullish structure. Higher highs and higher lows are keeping the uptrend intact. This adds to the bearish sentiment across dollar crosses. Price action in EUR/USD and GBP/USD aligns closely with current macro fundamentals.
Upcoming U.S. Data Could Extend USD Strength
Upcoming releases such as U.S. durable goods orders, PCE inflation, and revised GDP figures could influence the Fed’s stance. If these reports confirm ongoing strength in the economy, the dollar could continue its rally. This would place further pressure on major forex pairs.
Risk Sentiment and Global Factors
Market participants are closely watching global risk sentiment and geopolitical tensions. These factors may amplify or weaken the dollar’s appeal as a safe-haven currency. With global uncertainty still present, any instability abroad may act as a tailwind for the USD.
Conclusion
Recent U.S. economic data has reinforced the dollar’s dominance in forex markets. The American economy’s continued outperformance, along with a cautious Fed, has shifted sentiment in favour of the USD. Unless there is a sharp reversal in data or central bank tone, downward pressure on EUR/USD and GBP/USD may persist in the near term.