The US Dollar experienced a reversal, recovering from two consecutive daily declines and achieving gains on Thursday. This was driven by ongoing trade tensions and a robust report on the US labour market, with the US Dollar Index hovering above the 97.00 level as US yields slightly rebounded.
EUR/USD saw a decline, reaching two-week lows near 1.1660, amid a stronger US Dollar and increased expectations of a potential US-EU trade deal. Meanwhile, important data releases included Germany’s Wholesale Prices and a speech by the ECB’s Cipollone.
Gbpusd Downward Trend
GBP/USD resumed its downward trend, dropping to the low 1.3500s, influenced by a stronger Greenback. The UK is set to release key economic data, including GDP figures, Balance of Trade, and the NIESR Monthly GDP Tracker.
USD/JPY fluctuated, retesting the 146.50 zone due to additional gains in the US Dollar. Japan’s upcoming data releases include Machinery Orders and Industrial Production readings.
Despite gains in the US Dollar, AUD/USD rose for the third consecutive day, reaching around 0.6580. The upcoming data from Australia includes the Westpac Consumer Confidence Index.
WTI prices dropped below $67.00 per barrel, whilst gold prices rose, retesting the $3,330 zone. Silver prices neared the $37.00 mark per ounce.
With the US Dollar reversing its earlier weakness, we’re now watching global macro cues with sharper attention, as the Greenback’s behaviour hinges more visibly on rate expectations and current data prints. The bounce in yields, though slight, fed into renewed demand for the Dollar, and it’s revealing how quickly sentiment resurfaces when jobs data impresses. This should not be overlooked when positioning around major macroeconomic releases, especially as geopolitical tension continues to simmer beneath the surface, adding a risk premium that shows up unevenly across assets rather than in headline rates.
In the Euro area, the drop in EUR/USD wasn’t simply a story of US strength. German wholesale prices leaned slightly soft, and Cipollone’s remarks didn’t shift the dial much, but they served to underscore the cautious footing the European Central Bank maintains—particularly as political uncertainty creeps higher and trade optimism with Washington adds speculative noise. With EUR/USD now breaking below near-term support, we see the momentum aligning more with downside re-tests unless incoming data surprises decisively in the other direction. Traders should treat any squeeze higher in EUR/USD as pronouncedly tactical rather than a shift in the medium-term structure.
Sterling Concerns
Sterling’s drop wasn’t unexpected, but it is the depth of the sell-off toward the lower 1.3500s that brings a fresh layer of concern. With multiple data sets pending—including GDP and trade balance—there is likely to be intraday volatility that doesn’t yet reflect a broad change in narrative. Traders should weigh GDP surprises against underlying rate expectations, given market sensitivity to anything that suggests soft domestic output. If numbers beat even modest forecasts, this could offer Sterling a short-term reprieve; failure to do so risks triggering further washouts, especially with instability still lurking behind the Bank of England’s forecasts.
USD/JPY’s behaviour was more range-bound compared to peers, but the re-test of 146.50 reflects the usual pattern when US rates edge higher. Japan’s upcoming machinery and industrial figures will help clarify the output story, though unless they overshoot substantially, we don’t expect a break of the broader channel yet. The pair remains firmware-driven rather than data-reactive at present, and any reversion toward 145.00 could face solid Dollar-buying interest. That said, local fund flows may act as a counterbalance, particularly if input costs show re-acceleration.
What’s puzzling some observers is the resilience in AUD/USD despite clear demand for the USD. Whether it’s commodities buffering demand or short positioning unwinding, the Aussie’s three-day streak hints at a temporary decoupling rather than trend formation. The Westpac confidence numbers add another layer this week, and if sentiment wavers there, we may see the rally falter, even as risk appetite remains opaque. Caution is warranted on long positions at these levels as the pair is possibly exposed to a broader return of USD strength should risk assets stutter.
Commodities have started to diverge again. Oil prices dropped below the $67.00 mark, which reflects not just oversupply signals but also the stronger Dollar pressing demand expectations. If selling intensifies, a floor would have to be built from fresh OPEC signals or unexpected supply disruptions. Gold, conversely, re-tested $3,330 with steady flows, reaffirming its role as a volatility hedge. In the current setup, moves in precious metals are tied more closely to real yields than nominal ones, and if inflation indicators firm up in the coming weeks, we may see gold stall. Silver continued its ascent, eyeing $37.00. The metal’s grip on these levels is tentative, and traders should be wary of sharp reversals, particularly in futures-led moves.
