In real terms, the EUR/USD currency pair suffered one of its steepest drops ever. It dropped under the 1.1500 level in the wake of strong United States economic data. On Wednesday, during the American trading session, the currency pair extended its daily slide towards 1.1450, reflecting a prevailing bearish sentiment.
The U.S. Dollar received a boost from strong second-quarter Gross Domestic Product (GDP) figures which were above market forecasts. The ADP Employment Change report only added more fuel to the Dollar’s fire, playing a role in a broader change in market direction. Robust economic data released during the week caused traders to rethink their bets. As a result, this reassessment dealt a strong blow to the EUR/USD and GBP/USD crosses.
The persistent bearish pressure on the EUR/USD pair is further fueled by expectations regarding forthcoming Federal Reserve policy announcements. Market participants remain cautious as they await guidance on interest rates, which could have significant implications for the currency landscape. Increased U.S. Treasury bond yields have been a major burden on XAU/USD recently, sending prices lower in a hard manner. With gold prices testing the $3,300 mark, investors are paying closer attention to what the Fed decides.
To add for good measure, both the strength of the U.S. Dollar and UK Pound values. The GBP/USD currency pair today fell to a new two-month low, crashing below 1.3300. This decline was largely due to the significant appreciation of the Dollar. Latest highly influential GDP data had put a big damper on the Pound, but today’s private sector employment figures exerted even higher pressure.
As the uncertain market continues to digest these data releases, the Fed’s next decision looms large for the direction of both EUR/USD and GBP/USD. Analysts expect changes in these currency pairs to continue responding to U.S. economic performance. They will further be influenced by the most recent policy pronouncements from the Federal Reserve.