USD – Remains firmly supported, with the Dollar Index heading for a second consecutive weekly gain above 101.00 as strong US economic fundamentals continue to underpin demand.

EUR – Faces a critical test near 1.1350 against the dollar, with analysts warning that volatility divergences could lead to larger moves in the weeks ahead.

GBP – Continues to soften against the dollar, with GBP/USD trading near 1.3200 and remaining under pressure below key technical resistance levels.

USD: The US dollar remains the dominant theme in FX markets, with the Dollar Index holding comfortably above the 101.00 mark and on course for a second consecutive week of gains. Strong US economic data, particularly recent PMI readings, has reinforced confidence in the resilience of the US economy and reduced expectations of aggressive policy easing from the Federal Reserve. Investors continue to favour the greenback as growth differentials remain firmly in the US’s favour. From a technical perspective, momentum remains constructive, suggesting the upside bias remains intact unless upcoming economic data materially disappoints.

EUR: The euro remains under pressure as EUR/USD trades close to the key 1.1350 support region. Market participants view this level as a potential make-or-break point for the pair following several weeks of sustained dollar strength. Commerzbank analysts have also highlighted growing volatility divergences between the euro and dollar, suggesting larger market swings could emerge in the near future. While the single currency has so far avoided a deeper sell-off, the balance of risks remains tilted lower as investors continue to favour US assets and stronger US economic prospects. A sustained break below current levels could open the door to further downside in the weeks ahead.

GBP: Sterling has continued to ease against the dollar, with GBP/USD drifting towards the 1.3200 level. The pair remains under its 100-day moving average, a technical signal that continues to favour a bearish outlook in the near term. While the pound has been more resilient than the euro at times during the recent dollar rally, ongoing US economic strength and expectations for higher US rates have made it difficult for sterling to regain momentum. Traders will be closely watching upcoming UK economic data, but for now, the direction of GBP/USD is likely to remain heavily influenced by developments in the United States.