New Month, Familiar Trends: Dollar Stabilises, Euro Holds, Sterling Cautious.

• USD – Dollar Firms as Markets Turn Focus to Key U.S. Data Releases

• EUR – Euro Supported by Narrowing Rate Gap but Lacks Fresh Catalysts
  

• GBP – Sterling Still Cautious as UK Data and Budget Impact Resonate

USD:

The dollar is trading with a slightly firmer tone at the start of the new month, supported by position-squaring after last week’s softer performance. Attention is now shifting toward a heavy U.S. data calendar, including ISM manufacturing, JOLTS job openings, and payrolls later in the week — all of which are expected to shape expectations for the Federal Reserve’s 2026 policy path. With investors still pricing in early-year rate cuts, the bar for USD gains remains high, but any upside surprises in this week’s U.S. indicators could temporarily halt the currency’s recent drift lower. For now, the dollar is stabilising within familiar ranges, with traders cautious ahead of potential volatility from the incoming data.

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EUR: 

The euro opens the week on a steady footing, continuing to benefit from the narrowing yield differential with the U.S. as markets lean more confidently toward Fed easing. Euro-area fundamentals remain mixed, but the bloc’s inflation and activity data this week — including flash CPI and final PMI readings — could provide additional direction. For now, EUR/USD is comfortably mid-range, with investors reluctant to drive a breakout until clearer macro signals emerge. Month-start flows may offer a short-term lift, but momentum remains moderate, and EUR’s performance is likely to track broad USD sentiment through the early part of the week.

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GBP: 

Sterling begins December on uneasy ground, with markets still digesting last week’s Autumn Budget and reassessing the UK outlook into early 2026. While the fiscal plan offered clarity, concerns about the growth environment persist, limiting GBP’s ability to recover meaningfully against either the dollar or the euro. This week’s UK data — including final manufacturing PMI and consumer credit numbers — will be watched closely for signs of domestic momentum. GBP/USD remains sensitive to shifts in U.S. yields, while EUR/GBP continues to trade with a slight upward bias as investors favour euro stability over UK-specific uncertainty. Additional volatility is possible if UK data continues to undershoot expectations.

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