On Thursday morning, U.S. currency markets reflected a wait and see attitude. The GBP/USD pair struggled to hold above the 1.3450 handle and came under pressure. The currency pair saw a major corrective pullback in last week’s trading. They had a hard time followed through after breaking above the 1.3600 level at the start of this week. This trend highlights market participants’ ongoing focus on mid-tier US economic data and statements from Federal Reserve officials, both of which could provide further impetus for currency movements.
At the same time, the EUR/USD pair has its own issues, lingering on the defensive side, keeping losses close to the 1.1250 mark. USD’s stronger performance overall has put downward pressure on this pair and forced it into its current consolidation phase. Commercial traders are still on the lookout for strange happenings in the market. From the forthcoming US data releases to this week’s communications from the Federal Reserve, they are searching for clues that could move GBP/USD and EUR/USD.
The recent moves in these currency pairs are representative of a bigger shift within the foreign exchange market. The performance of the US Dollar on a day-to-day basis is the number one driver of market sentiment. As the Dollar continues to strengthen, GBP/USD and EUR/USD have been impacted, but not in the same manner. The ongoing corrective pullback around 1.3450 area for GBP/USD just underlines that buyers remain cautious to step in decisively. In the meantime, EUR/USD remains choppy around 1.1250, showing its difficulty to maintain gains against a firmer Dollar.
Market analysts are focused on US economic indicators. Further, they note the impact that Fed commentary makes on where these currency pairs move in the future. Traders and crypto observers are hungrily awaiting the next carrot of news or development. They should prepare for volatility in both GBP/USD and EUR/USD as they parse new economic data and any signals about monetary policy.