US Dollar Hits Fresh Highs as Inflation Data Looms and Euro Remains Under Pressure.

USD – The dollar has pushed to fresh highs, supported by elevated oil prices and weaker market sentiment, although heavy investor positioning leaves room for a sharp reversal. Tomorrow’s US CPI inflation report is the main focus, with inflation expected to rise to 3.6%.

EUR – The euro remains under pressure from French fiscal concerns and weak market sentiment, despite recovering some losses overnight. With little eurozone data due today, attention remains on the US dollar and upcoming ECB commentary.

GBP – Sterling continues to perform well against the euro while trading within its recent range against the dollar. Thursday’s UK inflation report is the next key release, with wage growth and further inflation data also important for the Bank of England’s next interest rate decision.

USD: The dollar pushed to fresh highs yesterday as oil prices remained elevated and market sentiment weakened. However, strong investor positioning in favour of the dollar could leave it vulnerable to a sharp reversal if incoming data disappoints. Today’s US releases include the NFIB small business survey and home sales figures, but the main event is tomorrow’s September CPI inflation report, with expectations pointing to a rise to 3.6%. The data will be closely watched for clues on the Federal Reserve’s next interest rate moves.

EUR: The euro fell further yesterday before recovering some ground overnight. French budget concerns and ongoing political uncertainty continue to weigh on the single currency, while weak market sentiment has limited its ability to recover. With the eurozone economic calendar quiet today, investors are likely to focus on movements in the US dollar ahead of speeches from European Central Bank officials later in the week. Oil prices and developments in France’s public finances remain key factors for the euro’s outlook.

GBP: Sterling continues to outperform the euro while holding within its recent range against the US dollar. Attention now turns to Thursday’s UK CPI inflation report, which will provide an important update on price pressures in the UK economy. Upcoming wage growth and inflation figures will also help shape expectations ahead of the Bank of England’s next interest rate decision. Stronger-than-expected data could support sterling by keeping interest rates higher for longer, while weaker figures may increase expectations of rate cuts and put pressure on the pound.