Dollar Gains amid Inflation Concerns (02.05.2026)

Markets tilted in favor of the US dollar after strong services data reinforced concerns over persistent inflation. 

EUR/USD eased toward 1.1800 as softer Eurozone inflation fueled expectations of ECB rate cuts, while the yen remained under pressure amid fiscal worries ahead of Japan’s elections. Gold and silver extended sharp losses as hawkish Fed signals and shifting rate expectations weighed on non-yielding assets. Sterling also retreated as investors positioned ahead of the Bank of England’s policy decision.

Euro Eases on Strong US Services

EUR/USD retreated toward 1.1800 as divergent economic signals favored the Dollar. A stronger US ISM services survey highlighted rising price pressures, effectively neutralizing concerns from weaker ADP employment data. Yet, Eurozone annual HICP inflation slowed to 1.7% in January, intensifying bets on ECB rate cuts. Investors now await President Lagarde’s upcoming policy remarks to determine if the ECB will accelerate its easing cycle to combat cooling price growth.

For EUR/USD, the closest resistance stands at 1.1830, while the first support level is located at 1.1770.

Yen Pressured by Takaichi’s Fiscal Pledges

The Japanese Yen hovered near 157 per dollar on Thursday, reflecting market unease over Japan’s fiscal outlook. Ahead of Sunday’s lower house elections, polls suggest a strong win for Prime Minister Takaichi, whose focus on expansionary spending and tax cuts has rattled bond markets. As 10-year JGB yields surge, investors worry about debt sustainability, overshadowing the impact of recent currency interventions. Markets now eye next week’s Q4 GDP data, hoping for a recovery from previous contractions.

Technically, resistance stands near 157.30, while support is firm at 156.40.

Gold Slips as Fed Outlook Shifts

Gold prices tumbled over 2% toward $4,840 on Thursday, retreating from recent peaks as Federal Reserve signals tempered rate-cut hopes. Governor Lisa Cook voiced resistance to further easing, citing stubborn inflation risks. Additionally, the nomination of Kevin Warsh as the next Fed Chair increased expectations of a more hawkish policy path. While President Trump later softened the tone regarding rate hikes, investors remain cautious about the pace of future cuts. Modest support from Iran tensions was insufficient to stop the decline.

Gold sees support near $4790, while resistance is around $4960.

Sterling Retreats as BoE Holds Steady

GBP/USD dipped toward 1.3620 during Asian trading as the Pound weakened ahead of the Bank of England’s policy update. Markets widely expect the BoE to maintain rates at 3.75% following December’s narrow cut. Meanwhile, the Dollar gained ground on Kevin Warsh’s hawkish Fed nomination and expectations of a cautious easing cycle. US data remained mixed, with resilient ISM services activity offsetting a softer ADP employment report.

From a technical view, support stands near 1.3570, with resistance around 1.3700.

Silver Plummets Amid Return of Volatility

Silver prices dropped toward $73.50 an ounce, plunging 16.5% as a brief recovery quickly dissolved into a sharp selloff. A strengthening Dollar, supported by hawkish Fed rhetoric and the nomination of Kevin Warsh as the next Fed Chair, pressured the non-yielding metal. Additionally, easing US-Iran tensions sapped safe-haven demand, while the failure of bargain buying to sustain momentum triggered a broader retreat in precious metals.

From a technical view, resistance stands near $79.30 while support is located around $73.50.