The USD remained on an uptrend overall although it traded horizontally for most of this month. Overall, the dollar index stayed near this year’s high and could continue to see strength. At the same time, a slide in treasury yields could weigh on the dollar.

The currency reacted with some volatility to the publication of US economic data on the job market and GDP figures among others. The GDP growth figures came up higher than expected, echoing the strength of the US economy in the face of high interest rates. However, weaker-than-expected job data could affect the Federal Reserve’s view.

In this regard, interest rates are still expected to remain unchanged during the next few months as the Federal Reserve maintains its restrictive monetary policy. The higher for longer view on interest rates could help maintain the dollar’s strength for the time being against other major currencies.

Traders could turn their attention to the release of the PCE figures tomorrow. The latter could affect expectations and generate some volatility ahead of the Federal Reserve’s meeting next week.

Its European equivalent, the European Central Bank, kept its interest rates unchanged today. The move could leave the European currency weaker against its US counterpart. While the euro area continues to see elevated inflation, economic conditions remain weak and weigh on the euro.

Source: London Loves Business