The cautious market sentiment at the start of the week helped the US Dollar (USD) maintain its strength against major currencies. In the afternoon, Federal Reserve (Fed) Chairman Jerome Powell refrained from confirming a potential rate cut in September, providing additional support for the USD. Powell noted the recent soft inflation data as progress but emphasized that decisions will be made on a meeting-by-meeting basis.
USD Index and Treasury Yields
The USD Index edged higher, approaching 104.50 during the European session, while the benchmark 10-year US Treasury bond yield remained steady near 4.2%. Concurrently, US stock index futures traded marginally higher after Wall Street’s main indexes ended the first trading day of the week in positive territory.
USD/CAD Gains on Inflation Expectations
The USD/CAD pair started the week on a bullish note, gaining nearly 0.4% on Monday. Investors anticipate the Consumer Price Index (CPI) to rise by 0.1% on a monthly basis in June, following a surprising 0.6% increase in May. Ahead of the inflation data release, USD/CAD edged higher towards 1.3700.
EUR/USD and Economic Sentiment
EUR/USD reached its highest level since late March, climbing above 1.0920 on Monday but failed to sustain its bullish momentum. The pair traded within a tight range around 1.0900 during the European morning. Market participants are awaiting the ZEW sentiment data for Germany and the Eurozone, set to be released on Tuesday.
GBP/USD Correction
After two weeks of impressive gains, GBP/USD underwent a correction as buyers retreated after testing the 1.3000 level. The pair was last seen moving sideways just above 1.2950. The UK’s Office for National Statistics is scheduled to publish June inflation data on Wednesday morning.
Gold Prices Hold Steady
Gold regained traction after testing $2,400 and closed modestly higher on Monday. XAU/USD held its ground and pushed higher towards $2,440 at the beginning of the European session on Tuesday.
USD/JPY Stability
USD/JPY closed the first day of the week virtually unchanged after experiencing significant losses in the latter half of the previous week. The pair gained traction early Tuesday and traded in positive territory near 158.50.
In summary, the USD remained robust amid cautious market sentiment and supportive comments from Fed Chairman Jerome Powell. Key economic data releases, including inflation figures and sentiment surveys, will likely influence currency movements in the coming days.
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