Focus on the Continued Strength of the U.S. Dollar and the Euro’s Downside Potential

Focus on the Continued Strength of the U.S. Dollar and the Euro’s Downside Potential

04.06.2026

In the U.S. currency market the previous day, the U.S. ISM Non-Manufacturing Purchasing Managers’ Index for May came in at 54.5, exceeding both the previous reading of 53.6 and the forecast of 53.8, confirming the resilience of the U.S. services sector.Demand for the U.S. dollar as a safe-haven asset, driven by renewed tensions in the Middle East, also weighed on the market, and the dollar-yen pair at times approached the 160-yen threshold. In the Tokyo market, it traded within a range of 159.55 to 160.00 yen.Currently, caution regarding currency intervention is likely to emerge around the 160.00 level, and on the upside, the range from 160.00 to 160.50 is likely to be viewed as resistance. On the downside, the focus will likely be on whether the pair can hold the range from 159.50 to 159.00.With U.S. initial jobless claims data scheduled for release today, we will be watching to see if the U.S. dollar continues to trade at elevated levels.

European currencies were weighed down by concerns over a slowdown in the eurozone economy, as the eurozone’s May composite PMI fell to 48.5 from 48.8 the previous month, dropping below 50—the threshold separating economic expansion from contraction.Although the services PMI improved slightly to 47.7 from 47.6 the previous month, it remained below 50, and the euro-dollar pair traded with limited upside in the low 1.1600 range.The euro/dollar pair traded within a range of 1.1613 to 1.1632 in the Tokyo session. On the upside, the levels around 1.1630 to 1.1650 are likely to be watched, while on the downside, the levels around 1.1600 to 1.1580 are likely to be in focus.Today, remarks by ECB President Lagarde and the release of April retail sales data for the eurozone are scheduled; we will be watching to see if there are any changes in market sentiment or views on monetary policy.

Today’s economic indicators include the Swiss May Consumer Price Index (CPI, month-over-month) at 15:30,a speech by European Central Bank (ECB) President Lagarde at 17:00, the UK May Construction Purchasing Managers’ Index (PMI) at 17:30, Eurozone April retail sales at 18:00,21:30 U.S. initial jobless claims and continuing claims for the previous week, along with the revised U.S. nonfarm labor productivity for the January–March quarter, and 24:40 remarks by Bank of England (BOE) Governor Bailey.In particular, during European trading hours, remarks by the ECB President and retail sales data are likely to drive the market, while during New York trading hours, U.S. employment-related indicators will be key factors; we should carefully monitor the reactions of the U.S. dollar, the euro, and the pound.