USD strength continues as traders raise bar for bearish dollar bets

The US Dollar Index climbed 0.4% to 104.25, extending its recent rally as traders become increasingly reluctant to bet against the greenback despite mixed economic signals. EUR/USD dropped to 1.0835, while GBP/USD fell to 1.2675, reflecting broad-based dollar strength. The shift in sentiment comes as resilient US economic data and persistent inflation concerns support expectations for a hawkish Federal Reserve stance. Market positioning data shows speculators reducing short dollar positions, with net shorts falling to their lowest level in six weeks. EUR/GBP remains range-bound near 0.8550, suggesting synchronized weakness in European currencies. Technical analysis reveals the Dollar Index approaching resistance at 104.50, a break of which could trigger acceleration toward 105.00. Support holds at 103.80, aligned with the 20-day moving average. The higher bar for dollar bears reflects growing recognition that Fed rate cuts may be further delayed than previously anticipated.