USD Holds Steady, EUR Faces Headwinds, GBP Braces for Shifts.

• USD trades below recent peaks as investors await U.S. labor data for interest rate guidance.
• Euro (EUR) experiences bearish trend against USD despite slower-than-expected Eurozone CPI inflation.
• GBP anticipates Friday’s NFP report while ADP Employment data hints at a robust labor market.
• ISM Services PMI survey indicates a moderation in consumer inflation, easing pressure on Federal Reserve.
• Danske Bank shifts sentiment towards GBP, anticipating Bank of England’s rate cut amid global trends.

USD: The dollar experienced a slight dip below recent highs as investors awaited U.S. labor data to gauge potential shifts in interest rates. Despite a setback in U.S. services growth, the dollar remains robust, maintaining its status as the top-performing G10 currency for the year. Federal Reserve Chair Jerome Powell’s recent comments signaled a steady approach, citing economic data as the primary guide for future policy adjustments. Market sentiment leans towards a probable rate cut by July, with futures pricing indicating a 60% chance of a Fed cut in June. The U.S. dollar index, up by 2.8% this year, reflects reduced expectations for U.S. rate cuts. All eyes are on upcoming PMI readings in Europe and U.S. labor data due on Friday for further market insights.

EUR: EUR/USD has seen a downward trend since early March, with resistance at the 50 SMA pushing it below 1.08. Despite slower-than-expected CPI inflation in the Eurozone, the euro has remained resilient, even gaining ground following weaker-than-anticipated U.S. services data. Projections for Eurozone CPI indicate moderate inflationary pressures, with expectations of the ECB’s potential rate cut in June. While unemployment rates in the Eurozone are expected to hold steady, the overall economic outlook remains uncertain.

GBP: As anticipation builds for Friday’s NFP report, recent updates hint at a strong labor market, with the ADP Employment report exceeding expectations. Additionally, the ISM Services PMI survey suggested a moderation in consumer inflation, providing relief to policymakers at the Federal Reserve. Danske Bank’s shift in sentiment towards the Pound suggests a bearish outlook, with expectations of a rate cut by the Bank of England aligning with global trends. Despite recent lows, GBP/USD saw a tentative recovery amid fluctuations in the dollar’s strength.