USD outlook: Economic data takes precedence over geopolitical concerns

The US dollar's near-term trajectory will be primarily driven by incoming economic data rather than geopolitical developments, despite ongoing global tensions. Market focus has shifted decisively toward fundamental indicators that could influence Federal Reserve policy decisions. The Dollar Index (DXY) remains sensitive to US economic releases, with traders closely monitoring inflation, employment, and growth metrics. Current geopolitical risks, while present, are taking a backseat to data-driven trading strategies. EUR/USD and GBP/USD movements will likely reflect dollar strength or weakness based on comparative economic performance. Additionally, commodity currencies may see indirect impacts through oil price fluctuations, as WTI crude futures respond to both supply dynamics and dollar movements. This data-centric approach suggests increased volatility around key economic releases, with technical levels serving as secondary considerations. Traders should prepare for potential sharp moves in major pairs coinciding with high-impact data announcements.