USD 
EUR 
GBP 
AUD
The big story today was the US dollar's continued strength, which was pretty wild considering the lack of major economic data releases. If you were watching EUR/USD, you'd have noticed it struggled to break above 1.18, and according to FXStreet, the Euro's softer tone versus the dollar is due to its struggle against resistance in the upper 1.17s. And honestly, it's not like we didn't see this coming, but the dollar's resilience is still impressive. The CB Employment Trends Index, which came out at 2:00 pm, didn't seem to have a huge impact on the market, but it's worth keeping an eye on.
The USDCHF pair is still leaning against its 100-hour moving average, which is a key resistance level to watch. ForexLive pointed out that corrective rallies last week stalled against that moving average, so it's clear that traders are keeping a close eye on it. Meanwhile, the AUD/USD pair surged toward the 0.7260 region, supported by improving demand for commodity-linked currencies, despite renewed geopolitical tensions. It's interesting to see the Aussie rallying like this, especially given the weak Chinese data we've seen lately. But hey, that's just the way the market works sometimes. The Euro/Yen cross closed at 184.9923, up a tiny bit, while the British Pound/Euro cross closed at 1.1575, also unchanged.
But what's really driving the dollar's strength? BNP Paribas economists think it's because the US economy is going to grow above potential in 2026, with GDP at 2.4% and inflation overshooting at 3.5%. They see the Fed Funds target range staying steady at 4.5%-4.75%, which would be a pretty big deal for the dollar. And if that's the case, we could see the dollar continue to test key levels, like the 0.5966 level we saw in the New Zealand Dollar/US Dollar pair today.
So what's next? Well, we've got a pretty quiet week ahead of us in terms of economic data, but that doesn't mean the market won't be volatile. If you're trading the Euro/Canadian Dollar pair, keep an eye on the 1.6100 level, which is where it closed today. And if you're watching the Aussie, just remember that it's still a pretty volatile currency, so be prepared for anything. The Pound/Euro cross closed at 1.1575, which is worth keeping an eye on, especially given the pressure on the UK's Prime Minister Keir Starmer. All in all, it's shaping up to be an interesting week, so stay tuned.
Dollar Dominance
The USDCHF pair is still leaning against its 100-hour moving average, which is a key resistance level to watch. ForexLive pointed out that corrective rallies last week stalled against that moving average, so it's clear that traders are keeping a close eye on it. Meanwhile, the AUD/USD pair surged toward the 0.7260 region, supported by improving demand for commodity-linked currencies, despite renewed geopolitical tensions. It's interesting to see the Aussie rallying like this, especially given the weak Chinese data we've seen lately. But hey, that's just the way the market works sometimes. The Euro/Yen cross closed at 184.9923, up a tiny bit, while the British Pound/Euro cross closed at 1.1575, also unchanged.
But what's really driving the dollar's strength? BNP Paribas economists think it's because the US economy is going to grow above potential in 2026, with GDP at 2.4% and inflation overshooting at 3.5%. They see the Fed Funds target range staying steady at 4.5%-4.75%, which would be a pretty big deal for the dollar. And if that's the case, we could see the dollar continue to test key levels, like the 0.5966 level we saw in the New Zealand Dollar/US Dollar pair today.
So what's next? Well, we've got a pretty quiet week ahead of us in terms of economic data, but that doesn't mean the market won't be volatile. If you're trading the Euro/Canadian Dollar pair, keep an eye on the 1.6100 level, which is where it closed today. And if you're watching the Aussie, just remember that it's still a pretty volatile currency, so be prepared for anything. The Pound/Euro cross closed at 1.1575, which is worth keeping an eye on, especially given the pressure on the UK's Prime Minister Keir Starmer. All in all, it's shaping up to be an interesting week, so stay tuned.