The US Dollar rocketed to a 13-month peak near 101.40 on Tuesday following stronger-than-expected manufacturing data that underscored American economic resilience. The S&P Global US Manufacturing PMI climbed to 55.7 in June, marking its strongest reading since May 2022 and significantly beating forecasts. The robust business activity data reinforced expectations that the Federal Reserve may maintain higher interest rates for longer, driving safe-haven and yield-driven flows into the greenback.
The dollar’s strength is pressuring emerging market currencies and commodities priced in USD, while creating headwinds for US exporters and multinational corporations. Forex traders are now closely monitoring upcoming PMI releases from Europe and Asia to gauge relative economic performance. Currency pairs including EUR/USD and GBP/USD extended losses as the dollar index surged through key technical resistance levels.
FXnCO Insight
Traders should prepare for continued dollar strength and heightened volatility in major currency pairs as diverging economic data between the US and other developed economies widens interest rate differential expectations.
Source: FXStreet