**Title: USD Buying Continues Its March: New Highs for the Greenback Versus Most Major Currencies**
*Original author: Adam Button, via ForexLive and TradingView News*
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The US dollar’s bullish momentum has not only persisted but intensified, driving the greenback to new highs against an array of major currencies. The first half of 2024 has seen the USD not just retaining but expanding its dominance in the foreign exchange markets. This ongoing rally is attracting traders, investors, and global policymakers alike to reassess strategies, investments, and economic outlooks worldwide.
This article delves into the price action fueling the dollar’s surge, analyzes the fundamental factors energizing the movement, weighs technical indicators, and considers global repercussions as US dollar strength continues to reshape financial landscapes.
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## The Current State of Play: USD’s Unstoppable Run
Recent sessions have seen the US dollar setting fresh multi-month and in some cases, multi-year highs against several G10 currencies. The latest leg of USD strength has been particularly notable for its velocity and breadth:
– EUR/USD fell decisively below 1.0700, extending losses and breaching technical supports that had held since March.
– GBP/USD tumbled under 1.2500, marking its weakest print since November.
– USD/JPY surged above 160.00, re-testing levels that prompted earlier BOJ intervention threats.
– Commodity-linked currencies (AUD, CAD, NZD) posted fresh lows versus the greenback, struggling under combined pressure of higher US rates and a softer commodity complex.
This sustained USD buying spree is not occurring in a vacuum. It results from a confluence of macroeconomic data surprises, central bank rhetoric, geopolitical undercurrents, and shifting investor sentiment.
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## Fundamental Drivers of the Dollar’s Strength
### Divergent Monetary Policy Expectations
At the heart of the USD rally is continued divergence between the Federal Reserve and its global peers. The Fed has persistently signaled hesitance to begin rate cuts amid sticky inflation. FOMC members have repeatedly highlighted their preference to gather more clear evidence of inflation returning to target before adjusting policy.
Key FOMC talking points continue to drive dollar demand:
– US economic data remains impressively resilient. Nonfarm Payrolls, retail sales, and manufacturing numbers have consistently come in stronger than consensus, underpinning expectations for a high-for-longer rate stance.
– Fed officials, including Chair Jerome Powell, have shifted their tone from considering an imminent pivot, to a more hawkish “wait and see” approach.
– Treasury yields have adjusted accordingly, with the 2-year and 10-year notes regaining ground and supporting yield differentials in favor of the USD.
Meanwhile, other major central banks are increasingly signaling their intentions to ease policy in coming months:
– The European Central Bank has adopted a dovish tone, with policymakers suggesting a rate cut cycle as early as the next meeting.
– The Bank of England faces softer UK data and growing political uncertainty, further tilting the odds toward cuts in H2 2024.
– The Bank of Japan continues to refrain from meaningful monetary tightening, even as inflation overshoots its targets. Tokyo’s limited ability to manage depreciation pressures has amplified the yen’s vulnerability.
### Robust US Economic Data
Economic calendar highlights have consistently reinforced USD bids, including:
– Nonfarm Payrolls (NFP) beats, with recurring monthly job gains well beyond forecast levels.
– Core PCE inflation, which remains stubbornly above the Fed’s 2 percent target.
– Resilient retail sales, signaling that households remain well-insulated from higher borrowing costs.
– Improved ISM readings in manufacturing and services, suggesting the US economy continues to expand while others stall or contract.
Every upside surprise strengthens investors’ conviction that the Fed will not lead the global easing cycle, boosting the appeal of USD-denominated assets.
### Safe-Haven Flows
Geopolitical tensions, particularly in Eastern Europe, the Middle East,
Read more on GBP/USD trading.