The US Dollar continued its impressive upward trajectory, reaching fresh six-month highs as investor confidence in the so-called “Trump trade” remains strong. Markets are anticipating key US economic data releases later in the week, which could shape the trajectory of the dollar and related assets.

US Dollar Index Surges Past 106.00 Mark

The US Dollar Index (DXY) broke through the 106.00 level, its highest in several months, fueled by a notable rise in US yields. This increase reflects heightened optimism in the dollar’s strength and comes ahead of several crucial economic reports that could further influence currency markets. The US Inflation Rate report will be front and center for investors, closely followed by data on mortgage applications from the Mortgage Bankers Association (MBA) and the weekly crude oil inventory report from the American Petroleum Institute (API).

Additionally, speeches from Federal Reserve members Logan, Musalem, and Schmid will likely provide further insights into the Fed’s stance on inflation and interest rates, potentially shaping market sentiment.

Currency Markets: The Dollar Dominates

• EUR/USD: The euro weakened against the dollar, hitting new 2024 lows in the 1.0595-1.0590 range. This decline underscores the robust sentiment surrounding the US dollar, as investors continue to favor the Greenback in anticipation of favorable US economic data.
• GBP/USD: The British pound also struggled, falling to the 1.2720 region—a three-month low. Like the euro, the pound remains under pressure due to the strong performance of the dollar, which continues to attract investors.
• USD/JPY: The dollar’s upward trend extended against the Japanese yen, with USD/JPY approaching four-month highs near the 155.00 mark. Japan’s economic calendar includes Producer Price Index data, which could impact the yen’s movement.
• AUD/USD: The Australian dollar was not spared in the dollar’s rally, dropping to monthly lows around 0.6510. The Australian Wage Price Index report is upcoming, and its results could play a role in shaping AUD sentiment.

Commodity Markets: Oil and Gold Feel the Heat

• WTI Crude Oil: West Texas Intermediate (WTI) crude prices saw a mix of gains and losses around the $68.00 per barrel level. This volatility comes after two days of declines, as traders consider the OPEC+ forecast revisions for oil demand. The strong US dollar, however, has kept oil prices subdued despite these demand forecasts.
• Gold and Silver: Gold experienced a significant dip, falling to two-month lows below the $2,600 mark per troy ounce. The rising dollar and increasing US yields have pressured gold prices as investors shift toward the Greenback. Silver also slid to five-week lows, but it managed to hold the crucial $30.00 per ounce support level.

The robust performance of the US dollar is exerting broad influence across global markets, from currency pairs to commodities. As the dollar strengthens, other currencies and commodities are feeling the pressure, especially ahead of this week’s key economic releases. Traders will closely watch the upcoming US inflation report, mortgage application data, and crude oil inventories, as well as any Fed commentary for additional cues. Investors are staying tuned to these updates to determine whether the dollar rally will persist—or if it will finally encounter resistance.