The U.S. dollar showed resilience on Monday, largely ignoring cautious comments from Federal Reserve officials. Cleveland Fed President Loretta Hammack struck a notably hawkish tone in an interview, emphasizing that inflation remains above the central bank’s 2% target and could take several more years to return to desired levels. Her remarks came just days after the Fed’s quarter-point rate cut, marking the first easing move since December, and contrasted with the broader policy trend toward monetary accommodation.
Hammack highlighted that while job growth has slowed recently, the labour market overall remains healthy, supported by low unemployment and minimal layoffs. She warned against aggressively cutting rates, noting that removing too many monetary policy restraints risks overheating the economy again. This message underscored the Fed’s ongoing struggle to strike a balance between supporting growth and preventing inflation from accelerating.
Her comments triggered brief volatility across equity markets and provided short-term support for the dollar, though currency markets quickly stabilized. Investors are now debating whether Hammack’s stance could hint at a slower pace of easing ahead, despite growing concerns among other Fed officials about labour market fragility and external risks such as tariffs.
EUR/USD Technical Outlook
The euro is currently attempting to stabilize, with buyers needing to reclaim 1.1820 to trigger a push higher. A successful break above this level could open the way toward 1.1850, and with stronger momentum, further upside toward 1.1882 and ultimately 1.1920 becomes possible. However, without significant buying interest from larger players, sustaining this upward trajectory may prove challenging. On the downside, strong demand is expected near 1.1785. If this support fails, attention will shift toward the 1.1760 low, with deeper buying opportunities potentially emerging around 1.1725.
GBP/USD Technical Outlook
The pound is attempting to build on its rebound but faces immediate resistance at 1.3540. A break above this level would allow bulls to target 1.3565, though progress beyond that remains difficult without additional catalysts. The ultimate upside target lies at 1.3605. On the flip side, if GBP/USD fails to extend higher, sellers are likely to press for control of the 1.3490 level. A breakout below this support could seriously weaken bullish sentiment and push the pair lower toward 1.3455, with the risk of further losses extending to 1.3415.
