USD: Global Bond Selloff Unlikely to Sustain Dollar Strength

The US dollar's recent gains amid a global bond market selloff may prove temporary, as underlying forex fundamentals suggest limited sustainable support for greenback strength. While rising yields typically favor the dollar, the current bond rout reflects broader concerns about global fiscal sustainability rather than US economic outperformance. EUR/USD and GBP/USD have both come under pressure, with the pound particularly vulnerable due to UK-specific fiscal concerns. However, EUR/GBP dynamics show the euro gaining against sterling, indicating selective currency weakness rather than broad dollar dominance. The US Dollar Index has rallied but faces resistance near recent highs, with traders questioning whether bond-driven moves can persist without corresponding economic data support. Near-term dollar strength may continue if the bond selloff accelerates, but medium-term prospects depend more on Federal Reserve policy trajectory and relative economic performance. Traders should focus on individual pair dynamics rather than assuming uniform dollar strength.