FX Market Update: Dollar firms on hawkish Fed; euro and sterling remain under pressure.

USD – Strengthens as markets price in a more hawkish Federal Reserve, with expectations for higher rates driving demand for the dollar.

EUR – Remains under pressure, with downside risks building despite periods of consolidation against the dollar.

GBP – Trades weaker amid rising political uncertainty, with sentiment towards sterling continuing to soften.

USD:

The dollar is trading with a firmer tone, supported by growing expectations that the Federal Reserve will maintain a more restrictive policy stance. Recent repricing of rate expectations is driving continued demand for USD, with markets positioning for prolonged higher rates. As a result, the dollar is pushing higher, with near‑term direction likely to remain driven by US data and shifts in the policy outlook.

EUR:

The euro continues to face downside pressure, with EURUSD largely consolidating but with risks skewed to the downside. While the pair has held within recent ranges, underlying momentum remains soft as US rate dynamics continue to favour the dollar. Any upside remains limited for now, with the broader bias still towards further weakness unless there is a meaningful shift in USD sentiment.

GBP:

Sterling is under pressure, weighed down by ongoing political uncertainty in the UK alongside a stronger dollar backdrop. The pound is struggling to attract buying interest, with technical signals pointing to further downside risk. While short‑term moves remain contained, sentiment towards GBP remains fragile, leaving it vulnerable if USD strength persists.

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