The US dollar has gained broad strength across major pairs following stronger-than-expected economic data that highlighted the resilience of the American economy. The positive data releases have significantly reduced market expectations for an early Federal Reserve rate cut, with traders now pricing in only a 15% probability of easing at the September meeting, down from 40% last week. Key economic indicators exceeded forecasts, reinforcing the Fed's cautious stance on monetary policy adjustments. The dollar index (DXY) climbed 0.5% to 104.20, approaching recent highs. Against this backdrop, EUR/USD fell 0.4% to 1.0810, while GBP/USD dropped 0.6% to 1.3320. The shift in rate expectations has widened yield differentials in favor of the dollar, attracting capital flows. Markets now await Friday's Non-Farm Payrolls data, which could further solidify the Fed's hawkish positioning if employment remains robust.
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