The dollar’s strong rally this week is firmly rooted in a shift in short-term rate dynamics, driven by hawkish Fed rhetoric and hotter inflation. That makes it harder to argue for a material rebound in EUR/USD, which may instead test 1.10 should upcoming data releases offer the dollar extra support. For now, we don’t see the conditions for a break below 1.10 The combination of hawkish Fedspeak and a US CPI beat earlier this week continues to pay dividends for the dollar. DXY is now back at Liberation Day (April 2025) levels, with real front-end rate differentials continuing to fuel strong dollar momentum. ... (full story)