Dollar Finds a Floor as Sterling Stays Strong and Euro Rally Shows Signs of Fatigue.
USD – The dollar has steadied slightly after a firm Fed stance, though it remains weak overall with rate-cut expectations largely unchanged.
EUR – The euro’s recent rally is losing momentum, with ECB comments signalling caution but no immediate policy response.
GBP – Sterling continues to outperform on broad dollar weakness, trading near multi-year highs as political headlines take focus.
USD:
The US dollar has found some near-term footing following a more resolute message from the Federal Reserve overnight. Although two policymakers, Miran and Waller, broke ranks by opposing the decision to leave rates unchanged, their dissent was widely viewed as politically motivated rather than a reflection of shifting economic conditions. The broader committee highlighted continued economic expansion and a labour market that, while cooling, no longer appears under immediate strain. Markets also took some reassurance from the Fed’s willingness to maintain policy independence amid recent political pressure, including controversy surrounding senior officials. Expectations for rate cuts were largely unchanged, with traders still looking toward mid-year as the earliest window for easing.
EUR:
After climbing more than 3% over the past fortnight, EUR/USD appears to be losing upward momentum as the week draws to a close. Recent commentary from ECB officials has highlighted concerns that further euro strength could add to disinflationary pressures, although there has been little indication that policymakers are considering an active response at this stage. For now, the single currency remains elevated but is showing early signs of consolidation.
GBP:
Sterling continued to advance against the dollar overnight, hovering close to the multi-year highs reached earlier in the week and strengthening to its best level in several weeks against the euro. The pound has benefited disproportionately from broad USD weakness rather than domestic drivers. On the political front, focus today is on Prime Minister Keir Starmer’s visit to China, where discussions are centred on deepening bilateral ties and finalising an intelligence-sharing agreement aimed at tackling human trafficking.