Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The U.S. dollar traded slightly higher on Thursday, extending recent gains as investors positioned ahead of pivotal U.S. inflation data and a cluster of central bank meetings across Europe and Asia.
The Dollar Index rose 0.1% to 98.127 by 04:10 ET (09:10 GMT), building on a modest advance in the previous session. Despite the near-term resilience, the greenback remains under pressure on a broader horizon, down more than 9% year-to-date, putting it on track for its steepest annual decline since 2017.
Focus shifts to U.S. labor market and inflation signals
Markets remain highly sensitive to incoming U.S. data as traders attempt to refine expectations for the Federal Reserve’s policy path in 2026. Earlier this week, nonfarm payrolls increased by 64,000 in November, pointing to continued but slowing job creation. At the same time, the unemployment rate climbed to 4.6%, its highest level since 2021, reinforcing signs of a cooling labor market.
Attention now turns to weekly jobless claims and, more importantly, the U.S. consumer price index (CPI) due later on Thursday. Together, these releases are expected to shape near-term rate expectations, particularly after the Fed’s recent shift toward a more cautious easing stance. Any downside surprise in inflation could revive bets on further rate cuts, while firmer price pressures may underpin the dollar in the short term.
Sterling under pressure ahead of Bank of England decision
In Europe, GBP/USD slipped 0.1% to 1.3359, as investors awaited the Bank of England’s policy decision later in the day. The BoE is widely expected to cut interest rates to 3.75% from 4.0%, following a notable slowdown in inflation and signs of weaker economic momentum.
U.K. inflation data released on Wednesday showed a sharp deceleration, reinforcing expectations of imminent easing. However, at 3.2%, inflation remains the highest among G7 economies, complicating the BoE’s longer-term outlook. Markets are currently pricing in just one additional rate cut in 2026, though expectations for a second cut have edged higher following the latest inflation print.
Analysts caution that sterling may struggle to find support even if the BoE delivers a relatively cautious cut, given that speculative positioning is already heavily underweight the currency.
Euro steady as ECB seen on hold
The euro eased modestly, with EUR/USD down 0.1% to 1.1730, ahead of the European Central Bank’s policy announcement. The ECB is expected to leave interest rates unchanged, while potentially upgrading its growth forecasts after signs of resilience in recent eurozone data.
Following a more hawkish tone from ECB officials last week, investors will be watching closely to see whether this stance is reinforced through updated projections and forward guidance. Central banks in Sweden and Norway are also expected to remain on hold, signaling a pause in the region’s easing cycle.
Yen softens as BOJ meeting begins
In Asia, USD/JPY edged 0.1% higher to 155.82, with the yen weakening slightly as the Bank of Japan kicked off its two-day policy meeting. The BOJ is widely expected to deliver a rate hike on Friday, continuing its gradual normalization after years of ultra-loose monetary policy.
Persistent inflation above the BOJ’s 2% target, rising wages, and improving domestic demand have strengthened the case for tighter policy, even as global growth risks remain elevated.
Elsewhere, USD/CNY edged marginally lower to 7.0417, while AUD/USD rose 0.1% to 0.6610, as traders largely stayed on the sidelines ahead of the U.S. CPI release.
Overall, currency markets remain tightly range-bound, with direction likely to be dictated by inflation data and central bank guidance over the next 24–48 hours.
