Ahead of Significant Data Releases, US Dollar Continues its Rally

The US Dollar (USD) is maintaining its strength against other currencies as it continues to rebound. The US Dollar Index remains near two-week highs around 103.00 after a surge on Wednesday. Today, the European Commission will release June’s business and consumer sentiment data during the European session. Market participants will closely watch inflation figures from Germany, the US Bureau of Labor Statistics’ final revision of first-quarter Gross Domestic Product (GDP) growth, and the weekly Initial Jobless Claims data, all of which are scheduled for later in the day.

During a policy panel at the ECB Forum on Central Banking on Wednesday, FOMC Chairman Jerome Powell conveyed the belief that more tightening is on the horizon, driven by a robust labor market. Powell reiterated his hawkish stance during an event in Spain on Thursday, emphasizing that a majority of policymakers expect two or more rate hikes by year-end. Additionally, the Federal Reserve’s Bank Stress Test revealed that large US banks are well-prepared to withstand a severe recession and maintain lending activities.

The EUR/USD pair initially fell below 1.0900 during Asian trading but staged a modest recovery afterwards. ECB President Christine Lagarde, speaking at the same panel with Powell, confirmed the likelihood of another rate hike in July but refrained from providing further details about policy steps later in the year. In Spain, the annual Consumer Price Index rose by 1.9% in June, a significant decline from the 3.2% increase recorded in May.

GBP/USD experienced a loss of over 100 pips and approached the 1.2600 level on Wednesday. The pair is currently struggling to establish a clear direction early on Thursday.

USD/JPY reached its highest level since November, surpassing 144.70 during the European morning on Thursday. However, it quickly retraced more than 50 pips shortly after the jump and is currently trading slightly below 144.50. Tomorrow, during the Asian session, the Japanese economic docket will feature data such as the Tokyo Consumer Price Index, Industrial Production, and Unemployment Rate.

Gold prices continue to be weighed down by the hawkish rhetoric from central banks. XAU/USD fell towards $1,900, touching its lowest level since early March.

Bitcoin experienced a 2% loss on Wednesday but managed to stay comfortably above $30,000. Ethereum approached the $1,800 mark earlier in the week before recovering towards $1,850 on Thursday.