The US Dollar Index (DXY) maintained a neutral tone near the 99.20 level, following stronger than expected US Manufacturing Purchasing Managers Index (PMI) data, which reinforced expectations that the Federal Reserve may maintain a cautious stance on interest rate cuts [1]. The DXY marked a new daily high on Thursday, extending its streak to eight consecutive days of higher highs [1].
Richmond Fed President Thomas Barkin contributed to the Greenback's support by stating that current policy is 'in a good place to respond to ongoing shocks,' and noted that long-term inflation expectations remain contained [1]. The US Dollar was the strongest against the Canadian Dollar, with a 0.25% gain against the Japanese Yen and smaller moves against other major currencies [1].
EUR/USD fell toward the 1.1620 level as broad US Dollar strength pressured the Euro, which was also weighed down by cautious sentiment regarding the Eurozone growth outlook and expectations that the European Central Bank could continue easing policy later this year [1]. GBP/USD remained muted near 1.3440, with Sterling under pressure from both a stronger USD and recent UK economic data pointing to a slowdown in growth momentum, as traders assess the outlook for Bank of England rate cuts [1].
USD/JPY rose toward the 158.90 region, approaching the key 160.00 level that previously prompted intervention by Japanese authorities. The pair gained support after the US Manufacturing PMI rose to 55.3 in May. US Treasury Secretary Scott Bessent stated that the United States and Japan agree that excessive volatility in currency markets is undesirable [1].
CONCLUSION
Stronger than expected US Manufacturing PMI data has steadied the US Dollar and reinforced expectations for a cautious Federal Reserve policy stance. Major currency pairs reflected the Greenback's strength, with notable moves in EUR/USD and USD/JPY. Market sentiment remains focused on central bank outlooks and economic data trends.