The US Dollar Index (DXY) remained steady near the 101.40 level, supported by resilient US manufacturing activity and elevated long-term Treasury yields, despite a mix of economic data releases. The US ISM Manufacturing PMI declined to 53.3 in June from 54.0 in May, missing expectations but staying above the 50.0 threshold that signals expansion. New Orders eased to 56.0, and the Prices Paid Index dropped to 73.0 from 82.1, indicating that input prices have cooled but remain elevated [1].
Labor market data showed some softness, with ADP private payrolls increasing by 98,000 in June, below expectations and down from May’s 122,000 gain. This weaker reading limited the upside for the US Dollar and increased caution ahead of the official US jobs report, which is anticipated to show a slower pace of hiring while the Unemployment Rate is expected to remain near 4.3% [1].
On the policy front, Federal Reserve Chair Kevin Warsh reaffirmed the Fed’s 2% inflation target and stated that the central bank would not tolerate inflation remaining above target, though he did not provide direct guidance on the July policy decision [1].
In currency markets, the US Dollar was the strongest against the Euro, gaining 0.38% on the day. EUR/USD traded under pressure near the 1.1380 area as investors digested softer Eurozone inflation data and comments from both ECB and Fed officials. Eurozone annual HICP inflation fell to 2.8% in June from 3.2% in May, below expectations of 3.0%, while core inflation eased to 2.4% from 2.6%. ECB President Christine Lagarde noted that inflation and growth risks in the Eurozone are now more balanced following the recent decline in energy prices. ECB policymaker Alexander Demarco also cautioned that the central bank should not rush policy changes [1].
CONCLUSION
The US Dollar maintained its strength amid mixed US economic data and cautious central bank commentary, while the Euro weakened on softer inflation readings. Market participants remain focused on upcoming US jobs data and central bank policy signals for further direction.