USD: DXY’s attempt at the 98 mark
The US dollar index (DXY) remains capped by its 50‑day moving average (97.940), which sits near the 98 mark – a level the index has failed to reclaim since USD sentiment soured in early January 2026. Supported by a spike in oil prices and a hawkish‑leaning Federal Reserve that welcomes signs of a more stable labour market, the dollar has staged a comeback from its January lows at 95.551, levels last seen in 2022. Yet for a move above 1.18, investors appear to be waiting for further developments on the trade front. In yesterday’s State of the Union address, Trump reiterated his resolve to impose trade tariffs despite the SCOTUS ruling, leaving the dollar to start today’s session on the soft side.
Even so, the dollar so far appears largely unbothered by the uncertainty unleashed by the SCOTUS ruling on tariffs. Markets may be leaning toward a scenario where the eventual tariff rate ends up lower. But as we saw in 2025, the path to the tariff outcome can matter more for the dollar than the final rate itself. Reliance on alternative tariff mechanisms – potentially narrower in scope and less durable than those struck down – could create an even more uncertain environment, something investors are unlikely to welcome.
Onto the Fed outlook, we heard from several FOMC members yesterday – Governor Lisa Cook, Chicago Fed President Austan Goolsbee, and Governor Christopher Waller. Their messaging was broadly aliged: the focus is shifting more unanimously toward the inflation outlook, with the labour market showing clearer signs of stabilisation. Markets have taken note, with no meaningful rate cuts priced before July.
EUR: EUR/USD holds the line
EUR/USD has glided along the 50‑day moving average since last week (1.1774), with its slope – and that of other key averages – essentially flat, offering little directional bias as the pair waits for its next catalyst. As we’ve noted repeatedly, a return to a 1.15–1.18 range would be understandable, but we’re not convinced the balance of risks favours that setup just yet. Bullish fuel from the Fed’s hawkish leanings remains muted by lingering soft USD sentiment. While the former is getting the data it needs to firm up, the latter has grown more vulnerable to further deterioration following the SCOTUS ruling on Trump’s tariffs. Yet markets appear to be waiting for additional clarity before folding this development into the USD‑negative narrative outright and pushing EUR/USD firmly back above 1.18. In the meantime, we read the patient drift just above the 50‑day as a sensible technical posture ahead of clearer direction returning to price action.
GBP: March BoE cut odds overcooked?
Sterling has nudged back above $1.35, helped more by dollar weakness as markets lean into a bearish USD narrative, driven by rising policy uncertainty and a sense that global investors are trimming US exposure after years of outperformance. Although GBP/USD is down more than 2.5% from its January peak of $1.3868, the pair still sits in the top 15% of its three‑year range.
But the macro narrative driving dollar bearishness isn’t fully supported by the data. US activity has cooled at the edges, but it continues to outperform most developed‑market peers. And economist surveys show 2026 US growth expectations holding up well, reinforcing the idea that the US is easing back from above‑trend strength rather than drifting toward anything resembling stagnation.
On the domestic front, the latest BoE testimony isn’t moving markets yet, but it could matter for sterling next month. The Treasury Committee hearing offered a clearer read on the policy debate and it wasn’t as dovish as traders had assumed. Governor Bailey repeated that he will go into upcoming meetings “asking if a cut is justified”, but he also warned he hasn’t seen enough evidence to support an immediate move. Headline inflation is easing broadly as expected, helped by softer goods prices and deflationary impulses from China, but services inflation — the BoE’s preferred gauge of domestic pressure — remains too sticky and still sits well above Bank Rate. That alone arguably makes a March cut more of a stretch.
With February’s inflation data arriving after the March meeting, Bailey may want more confirmation before acting. In theory, a hawkish repricing should offer the pound some support. But the broader backdrop — softer UK data, political noise, and a heavy global risk tone — means sterling is unlikely to fully capitalise. A later start to the easing cycle may slow the pace of GBP losses, but it doesn’t flip the narrative outright.
Market snapshot
Table: Currency trends, trading ranges & technical indicators
Key global risk events
Calendar: February 23-27
All times are in GMT
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
