Dollar Set for Third Weekly Gain as Trade Tensions Ease and Economic Optimism Grows

Published by DailyForex.pk

The U.S. dollar is on track to secure its third consecutive weekly gain, fueled by easing trade tensions and stronger-than-expected U.S. economic data. Improved investor sentiment is driving a renewed appetite for U.S. assets, helping the greenback rebound after a volatile start to the year.

Key Drivers Behind Dollar Strength

1. Easing U.S.-China Tariff Tensions:
China’s Commerce Ministry recently signaled a willingness to engage in trade talks with the U.S., provided Washington shows sincerity and removes unilateral tariffs. This development has given the market hope for a potential resolution to long-standing trade frictions.

2. Positive Economic Data:
The U.S. economy continues to show signs of resilience:

• ISM Manufacturing PMI showed a better-than-expected reading of 48.7 in April, down slightly from March but ahead of forecasts.
• Initial jobless claims rose to 241,000, indicating a softening labor market, which investors will closely watch ahead of the nonfarm payrolls report.

3. Strong Wall Street Earnings:
Major tech giants like Microsoft and Meta Platforms delivered upbeat earnings, boosting confidence in U.S. equities and supporting the dollar.

Currency Market Snapshot

• Dollar Index (DXY): Holding strong, poised for a 0.5% weekly gain amid reduced market volatility.
• USD/JPY: Trading at 145.53, near a three-week high.
• EUR/USD: Little changed at 1.1290, staying near recent lows.
• AUD/USD: Edged up to 0.6396 as risk sentiment improved.

Market Outlook: Nonfarm Payrolls in Focus

Traders are now eyeing the U.S. Nonfarm Payrolls (NFP) report, expected to show 130,000 new jobs added in April, down from 228,000 in March. The outcome could significantly influence Federal Reserve rate cut expectations and short-term dollar strength.

Chris Weston from Pepperstone noted:

“Stronger data could lift U.S. Treasury yields and push the dollar and equities higher, while also accelerating gold selling.”

Conclusion

The U.S. dollar’s bullish momentum remains intact as tariff concerns fade and economic data supports confidence in the American economy. With key indicators like the NFP report and inflation data ahead, traders at DailyForex.pk will continue monitoring these developments closely.

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