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 New

In the U.S. currency market the previous day, the May ISM Non-Manufacturing Purchasing Managers' Index 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, with the dollar/yen pair approaching the 160 yen threshold at times. In the Tokyo market, the pair traded within a range of 159.55 yen to 160.00 yen.Currently, caution regarding potential 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 came under pressure as concerns over a slowdown in the eurozone economy weighed on sentiment; 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 in a range of 1.1613 to 1.1632 in the Tokyo session. Resistance is likely to be seen around 1.1630 to 1.1650, while support is likely to be found around 1.1600 to 1.1580.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 regarding monetary policy.

Today's key economic indicators include the Swiss May Consumer Price Index (CPI, month-on-month) at 3:30 p.m.,a speech by European Central Bank (ECB) President Lagarde at 5:00 PM, the UK May Construction Purchasing Managers' Index (PMI) at 5:30 PM, Eurozone April retail sales at 6:00 PM,21:30 US Initial Jobless Claims (previous week), Continuing Jobless Claims (previous week), and US Nonfarm Productivity (revised, Jan-Mar), and 24:40 remarks by Bank of England (BOE) Governor Bailey.In particular, during European trading hours, the ECB President’s remarks and retail sales data are likely to be key drivers, while during New York trading hours, U.S. employment-related indicators will likely be the main focus; we should carefully monitor the reactions of the U.S. dollar, the euro, and the pound.