US Session – Market Drivers: Dollar Climbs as Markets Await Central Bank Moves and Key Economic Signals

The U.S. dollar extended its rally, reaching fresh three-month highs as global investors assessed the Federal Reserve’s next steps and remained wary of the ongoing U.S. budget standoff. The dollar’s strength reflected a broader mood of caution, with markets bracing for a series of central bank decisions and critical economic releases in the days ahead.

The Dollar Index notched its fourth straight daily gain, hovering just below the 100-point threshold. Traders are closely watching upcoming U.S. data on economic sentiment, oil stockpiles, and a speech from a Fed official that could offer insight into the central bank’s policy direction heading into year-end.

In Europe, the euro continued to slide, nearing 1.1500 against the dollar—its weakest level since August. Market focus is shifting to new figures on German industrial orders and regional services performance, as well as comments from the European Central Bank president that may shape expectations for the eurozone’s monetary path.

The British pound also came under pressure, dipping toward seven-month lows around 1.3100. Investors are weighing domestic fiscal concerns and the dollar’s resilience, with attention turning to the U.K. services PMI ahead of the Bank of England’s upcoming rate decision.

In Asia, the Japanese yen remained range-bound near 154 per dollar, with markets awaiting the Bank of Japan’s meeting minutes for clues on inflation strategy and currency policy. Meanwhile, the Australian dollar posted a fourth consecutive decline, approaching 0.6520, as traders anticipated a steady hand from the Reserve Bank of Australia on interest rates.

Commodities echoed the market’s cautious tone. Oil prices slipped below $61 per barrel amid speculation that OPEC+ may delay planned production hikes, highlighting uncertainty over global supply-demand dynamics. Gold rebounded above $4,000 per ounce following last week’s sharp drop, while silver remained subdued just under $48.

As the week progresses, investors are expected to remain vigilant amid evolving central bank signals, volatile commodity trends, and broader geopolitical developments. With the dollar gaining momentum and critical data on the horizon, markets are poised for potentially sharp shifts in sentiment as the year winds down.