26/07/2024
Written by: Ian Morley
Summary
The US dollar experienced a significant surge on Friday, driven by a robust January jobs report. This development has reduced the anticipated number of rate cuts by the Federal Reserve for the year by 30 basis points, with March rate cut projections dropping to a 17% probability.
GBPUSD hit the lower end of its trading range, while EURUSD reached its lowest point since mid-December.
The USD’s momentum continued after Federal Reserve Chair Powell expressed concerns about the risks associated with premature interest rate cuts during an interview with CBS’s 60 Minutes.
Our Analysis
The demand for the USD persists following Powell’s recent comments. We are monitoring whether GBPUSD can break below its current sideways range and if EURUSD can test its December lows.
While final revisions of PMI numbers for the UK, EU, and US are expected today, their impact on the foreign exchange market may be limited. However, an increase in the ISM services number to the anticipated 52 could further boost USD demand.