**U.S. Dollar Recovers from Weekly Lows: In-Depth Analysis on Major Currencies (EUR/USD, GBP/USD, USD/JPY, USD/CAD)**
*Original analysis by James Hyerczyk, FX Empire. Expanded and supplemented with relevant market data and insights.*
The U.S. Dollar (USD) experienced a recovery from its recent weekly lows on Friday, gaining strength across major currency pairs following the release of key U.S. economic data and ongoing global developments. Market participants responded to the latest figures on the U.S. economy, including inflation metrics and consumer sentiment, which collectively reinforced expectations that the Federal Reserve may maintain elevated interest rates for a longer period.
This article provides an extended version of James Hyerczyk’s original report on FX Empire, offering a comprehensive analysis of the dollar’s rebound and its implications on major forex pairs including EUR/USD, GBP/USD, USD/JPY, and USD/CAD. Additional input comes from recent Bloomberg, Reuters, and CNBC economic updates as context for the evolving currency market.
## Key Takeaways from Friday’s Forex Movement
– The U.S. Dollar reversed earlier losses, buoyed by stronger-than-expected inflation and consumer sentiment data.
– The rebound reinforced hawkish expectations regarding the Federal Reserve’s monetary policy outlook.
– Dollar strength pressured major currencies such as the Euro (EUR), British Pound (GBP), and Canadian Dollar (CAD), while bolstering the greenback’s performance against the Japanese Yen (JPY).
– The week ended with market participants closely monitoring upcoming central bank meetings and economic releases for further direction.
## Core U.S. Data That Boosted the Dollar
The turnaround in the dollar’s trajectory was tied to a combination of encouraging data points released on Friday.
### 1. Michigan Consumer Sentiment Index
– The University of Michigan’s Consumer Sentiment Index recovered slightly, coming in at 67.4 in the preliminary June reading, up from 69.1 in May.
– Inflation expectations rose:
– 1-year inflation expectations ticked up to 3.3% from 3.2% previously.
– 5-year expectations edged higher to 3.1%, from May’s print of 3.0%.
– The higher-than-expected inflation outlook risked tightening consumers’ purchasing power, but indicated economic resilience that supports interest rate stability.
### 2. Producer Price Index (PPI)
– The Labor Department reported that the PPI rose 0.2% month-over-month in May, below the consensus of 0.3%, but April’s number was revised upward from 0.3% to 0.5%.
– Core PPI excluding food and energy was unchanged in the latest reading.
– The year-over-year PPI climbed 2.2%, up from 2.1% previously, indicating underlying pricing pressures remain.
### 3. Federal Reserve’s Policy Stance
– While the Fed held rates steady in its most recent FOMC meeting, policymakers revised their median projection to just one rate cut in 2024, down from three projected earlier.
– Fed Chair Jerome Powell emphasized a data-dependent approach, but also suggested the central bank is not yet convinced inflation is under control enough to begin easing policy prematurely.
## Currency Pair Performance and Analysis
### EUR/USD: Euro Struggles Amid Political Uncertainty
– The euro fell against the U.S. dollar on Friday, closing at around 1.0700, retreating from its earlier highs around 1.0800.
– Political uncertainty intensified in France after President Emmanuel Macron called for a snap election in response to gains by the far-right in the European Parliament elections. The move is viewed as a risky political gambit that could undermine government stability and fiscal policy.
– European economic data has also been underwhelming. Industrial production figures have slipped, and inflation pressures have moderated, making the European Central Bank’s (ECB) recent rate cut justified.
– The ECB remains
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