Tracking the USD, GBP, and EUR Amid Economic Uncertainty.

• USD remained stable on Tuesday amid mixed U.S. Treasury yields, with traders cautious ahead of the release of the core PCE deflator, a key inflation gauge for the Federal Reserve.
• Expectations suggest a slight decline in annual inflation, but higher-than-anticipated figures could delay Fed rate cuts, potentially strengthening the dollar.
• GBP weakened despite expectations of a delayed rate cut compared to the Federal Reserve, as market sentiment remained volatile ahead of crucial U.S. economic data.
• The Bank of England’s cautious monetary policy approach, driven by persistent inflation pressures, supported the Pound, but investors anticipate rate cuts from August onwards.
• Euro faced pressure against the USD, hovering near 1.0840, as traders awaited key economic indicators from both the Eurozone and the United States, with attention focused on upcoming inflation figures that could sway the EUR/USD pair based on central bank rate cut decisions.

USD: The U.S. dollar maintained a steady stance on Tuesday, fluctuating modestly amidst mixed U.S. Treasury yields. Traders exercised caution ahead of a pivotal event: the release of the core PCE deflator, a crucial inflation gauge for the Federal Reserve. While expectations anticipate a slight decline in annual inflation, the risk of unexpected inflation spikes looms large, potentially delaying Fed rate cuts and boosting interest rate expectations, thus strengthening the dollar. Shifting focus, let’s delve into the technical outlook for EUR/USD and GBP/USD pairs to gauge upcoming market movements.

GBP: Despite expectations of a delayed rate cut compared to the Federal Reserve, the Pound Sterling dipped as market sentiment remained volatile ahead of critical U.S. economic data. The Bank of England’s cautious approach to monetary policy, driven by stubborn inflation pressures, supports the Pound. Investors anticipate rate cuts from August onwards, which could bolster the stock market but might reignite inflationary concerns.

EUR: Euro struggles near 1.0840 against the USD as traders tread carefully before key economic indicators from both the Eurozone and the United States. Recent remarks by ECB President Christine Lagarde affirming the central bank’s commitment to current policy measures provide some support. However, attention remains on upcoming data releases, particularly Friday’s inflation figures, which could sway the direction of the EUR/USD pair based on rate cut decisions by central banks.