Dollar Climbs on Hawkish Fed Minutes as EUR and GBP Struggle for Direction.

USD – Remains firm following hawkish Fed minutes, as markets reassess the rate outlook and trim cut expectations.

EUR – Under pressure from renewed dollar strength, with limited domestic catalysts to counter the move.

GBP – Softer overall, having slipped to multi-week lows versus the dollar and vulnerable to external drivers.

USD:

The dollar pushed towards a two-week high after a hawkish set of Federal Reserve meeting minutes. Several officials advocated for a more “two-sided” description of the future rate path, warning that a hike could be back on the table if inflation remains sticky. There was noticeably less concern about growth and the labour market compared to late last year, with the focus shifting back to the lack of meaningful progress toward the 2% inflation target.

Markets trimmed expectations for rate cuts in response, although with a new Fed Chair on the way, the broader consensus still leans toward two moves lower later this year. Attention now turns to weekly jobless claims and speeches from Fed officials Kashkari and Goolsbee. Tomorrow brings key releases in the form of Q4 GDP and February PMIs, which could provide further direction.

EUR:

The euro has come under pressure amid the resurgence in dollar strength, falling around 0.6% in yesterday’s session. With limited positive catalysts of its own, the single currency has struggled to offset the shift in US rate expectations.

Today’s focus in the eurozone is on December’s current account data and February consumer confidence figures. While these releases may generate some short-term volatility, the broader tone for EUR/USD is likely to remain driven by US developments unless eurozone data materially surprises.

GBP:

Sterling initially found brief support following the latest CPI report but ultimately slid to a three-week low against the dollar as USD momentum reasserted itself. The move highlights the pound’s sensitivity to shifts in US rate expectations.

It is a relatively quiet day for UK data, leaving sterling largely at the mercy of external drivers. Retail sales are due tomorrow morning, followed by February PMIs, which may offer clearer insight into the health of the UK economy and shape near-term expectations for Bank of England policy.

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