The dollar eased overnight as markets latched onto the Iran diplomatic signal, but it remains well above where it started the week. The conflict has reinforced its role as the default destination when investors are nervous – and with the situation in the Middle East still highly fluid, that bid is unlikely to disappear entirely.
Yesterday’s data added a fresh wrinkle. The ISM services purchasing managers’ index (PMI) jumped to 56.1 in February – the strongest reading since mid-2022 and well above expectations. The ADP private payrolls report also beat forecasts. Both releases point to an economy still running hot, making it harder for the Federal Reserve to justify cutting rates anytime soon. Tomorrow’s non-farm payrolls report is the week’s main event – a strong reading could lock in the dollar’s recent gains, while a soft one might give other currencies room to breathe.
EUR/USD: the past year
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