Dollar Near Yearly Highs, Euro Pressured by Energy Costs, Sterling Weighed by Oil and Policy Uncertainty.

USD – The dollar is trading near yearly highs as rising oil prices, geopolitical tensions, and expectations of delayed Fed rate cuts support safe-haven demand and Treasury yields.

EUR – The euro is under modest pressure from dollar strength and higher energy prices, while the ECB’s cautious policy stance keeps the currency range-bound.

GBP – Sterling remains weak against the dollar as energy price shocks, BoE policy uncertainty, and global risk sentiment weigh on the UK’s economic outlook.

---

USD:

The US dollar is trading close to its strongest levels of the year as rising oil prices and geopolitical tensions boost safe-haven demand and push Treasury yields higher. Markets are increasingly questioning whether the Federal Reserve will delay expected rate cuts if inflation pressures remain elevated due to the surge in energy prices. Recent data suggests inflation pressures remain relatively sticky, prompting markets to reassess how quickly the Federal Reserve may be able to cut interest rates this year. In the near term, the dollar’s trajectory is likely to remain tied to Treasury yield movements, geopolitical developments, and upcoming US macro data, particularly inflation and labour-market releases that could shape expectations for Federal Reserve policy through the remainder of the quarter.

---

EUR:

The euro is trading with a softer tone today, with EUR/USD drifting toward the mid-1.15 area as the stronger US dollar and rising energy prices weigh on the single currency. A surge in oil prices linked to escalating geopolitical tensions has increased inflation risks globally, supporting the dollar while pressuring currencies more exposed to imported energy costs such as the euro. Another factor influencing the euro is the outlook for European Central Bank policy. Policymakers are currently maintaining a cautious stance and are widely expected to leave interest rates unchanged at upcoming meetings, as they assess whether recent inflation pressures—particularly from energy—are temporary or persistent. This wait-and-see approach has limited strong directional moves in the euro.

---

GBP:

Sterling is trading with a softer bias and remains under pressure against the dollar, with GBP/USD slipping below the 1.34 level amid persistent safe-haven demand for the greenback. The pound is also facing domestic headwinds, including uncertainty around the Bank of England’s policy path and broader concerns about UK economic momentum. In the near term, sterling is likely to remain sensitive to global risk sentiment and energy-market developments, which continue to shape investor positioning in currency markets. One of the key drivers weighing on the pound is the surge in energy prices, which tends to have a more negative impact on the UK than on energy-producing economies. The recent spike in oil prices linked to Middle East tensions has increased concerns about imported inflation and the potential drag on UK economic growth, creating headwinds for sterling in the near term.

Economic Calendar