The US Dollar rose following strong US ISM Services PMI and JOLTS Job Openings data, along with a risk-off sentiment. Additional support came from concerns about China’s economy and hawkish comments from Atlanta Fed President Raphael Bostic. However, a cautious mood ahead of the US ADP Employment report and FOMC Minutes may challenge the dollar's recent gains.
Despite announcements from China’s government agencies to boost the economy and criticism of US tariffs, Asian stock markets struggled after Wall Street’s decline. Shanghai Securities News raised concerns about potential forced actions by China’s central bank, adding pressure on Asian stocks.
US President Donald Trump’s recent remarks about tariffs strengthened the dollar, reinforcing the risk-off mood.
As a result, the US Dollar Index (DXY) rose, testing past gains against major currencies and commodities. EURUSD and GBPUSD are recovering after a two-day loss, while AUDUSD, NZDUSD, and USDCAD are rebounding but lack strong momentum. Gold and crude oil remain strong, while cryptocurrencies and Asia-Pacific stocks face pressure.
Despite upbeat Eurozone inflation data, the Euro failed to gain traction as strong US data and hawkish Fed signals boosted the US Dollar. EURUSD bulls also face challenges from political concerns in France and Germany, along with doubts about the European Central Bank's recent hawkish stance. Additionally, uncertainty ahead of upcoming EU and US data keeps Euro buyers cautious.
GBP/USD sees mild gains, reversing the previous day’s losses after a two-day winning streak. The pair benefits from stronger UK data and consolidates ahead of speeches from Bank of England officials today.
Meanwhile, softer consumer confidence in Japan and growing doubts about the Bank of Japan’s rate hikes, despite hawkish comments from former BoJ Governor Kuroda, keep the USDJPY firm after rising for two straight days.
Commodity-linked currencies like the Australian, New Zealand, and Canadian dollars dropped recently due to a stronger US Dollar and concerns about China’s economy. However, as the market consolidates ahead of US data and with rising Gold and Crude Oil prices, along with stronger Australian inflation, AUDUSD, NZDUSD, and USDCAD have started to resume the week-start moves against the US Dollar, though they lack strong momentum.
Gold remains favorable for buyers as India and China’s central banks continue their gold purchases for the second month in a row, despite a stronger US Dollar. Gold bulls also remain hopeful ahead of key economic events later this week.
Crude oil saw gains, driven by a larger-than-expected drop in weekly API oil inventories. Despite a stronger US Dollar, higher Russian oil exports, and Canada’s plans to boost oil output to the US, oil prices rose. However, concerns about China’s economic transition weigh on energy buyers due to China’s major role as the world’s largest commodity consumer.
Both Bitcoin (BTCUSD) and Ethereum (ETHUSD) saw significant losses the previous day, continuing to face pressure as the US Dollar rebounded. The recent sell-off in crypto positions has added to the downward pressure, keeping both cryptocurrencies under strain at the time of writing. Despite attempts to recover, the market remains cautious, with ongoing profit-taking moves and broader market uncertainty weighing on digital assets.
Wednesday brings several crucial economic updates, including the Eurozone data dump, the US ADP Employment Change, and the latest Federal Open Market Committee (FOMC) minutes. These releases follow disappointing German retail sales, Japan’s weak consumer confidence, and stronger-than-expected inflation in Australia. These updates are expected to influence market sentiment and could affect currency and commodity prices.
The US Dollar is likely to maintain its recent recovery, supported by hawkish signals from the last FOMC meeting and positive US data. Even with some negative surprises, the Greenback could find further support in Friday’s US jobs report, offering buyers another opportunity to regain losses.
As a result, buyers of the Australian, New Zealand dollars, and crude oil should remain cautious, while gold and cryptocurrencies may continue to attract bullish attention. However, equities and major currencies are likely to face continued pressure.
May the trading luck be with you!
