FX Update: USD Resilient Amid Uncertainty, Euro and Sterling Trade with Downside Bias.
USD – Supported by ongoing demand for dollar liquidity, with geopolitical uncertainty underpinning the greenback despite tentative risk sentiment.
EUR – On the back foot as downside risks linger near key technical levels, leaving the single currency exposed amid fragile growth dynamics.
GBP – Steady after recent UK data, though momentum appears fragile with downside risks building against a firm US dollar backdrop.
USD
The US dollar is trading with a modest bid into the European session, supported by its structural role as a global funding currency. Commerzbank notes that existing USD liquidity backstops continue to stabilise markets, helping to underpin the greenback even as risk appetite shows signs of tentative improvement.
Ongoing geopolitical tensions, particularly related to war‑driven uncertainties, are reinforcing the dollar’s defensive appeal. While sentiment is not outright risk‑averse, demand for USD liquidity remains firm, keeping downside pressure limited and leaving the dollar resilient to shifts in broader macro and risk conditions.
EUR
The euro remains under pressure as EUR/USD trades close to key support levels, with UOB highlighting downside risks should the pair fail to defend the 1.1665 area. The broader technical structure remains fragile, increasing the risk of further losses if support gives way.
At the same time, macro uncertainties surrounding the Eurozone growth outlook continue to weigh on sentiment. With limited drivers for a sustained recovery, the euro is struggling to attract demand and remains sensitive to both risk sentiment and dollar strength.
GBP
Sterling is consolidating after recent gains, with GBP/USD holding above the 1.3450 region following support from stronger UK retail sales data. The figures provided short‑term relief for the pound, helping it stabilise after recent volatility.
However, UOB warns that downside risks are gradually building, with scope for a test of the 1.3400 level if momentum fades further. As a result, sterling remains more driven by broader US dollar dynamics than by strong domestic conviction, leaving near‑term price action vulnerable to external factors.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 7:00am BST - GBP | UK Retails Sales (MoM) | 0.1% | -0.6% |
| 7:00am BST - GBP | UK Retails Sales (YoY) | 1.3% | 1.8% |
| 09:00am BST - EUR | German Business Sentiment Index | 85.5 | 86.4 |
| 1:30pm BST - CAD | Canadian Retail Sales (MoM) | 0.9% | 1.1% |
| 3:00pm BST - USD | US Consumer Sentiment Survey | 48 | 53.3 |