USD gains momentum as EUR/JPY weakness supports dollar strength

The US Dollar Index has extended gains to 102.50, supported by persistent weakness in both European and Japanese currencies amid growing economic divergence. EUR/USD has slipped 0.4% to test 1.0950 support, while USD/JPY maintains strength above 149.00 despite intervention risks. The dollar's rally reflects contrasting economic conditions, with US data remaining relatively resilient compared to struggling European growth and Japan's ultra-loose monetary policy. European manufacturing continues to contract, while Japanese authorities face mounting pressure to defend the yen. Technical indicators suggest the Dollar Index could target 103.00 resistance, with momentum indicators showing bullish divergence. Key support levels for EUR/USD sit at 1.0920, while USD/JPY faces resistance at 150.00 psychological level. The sustained dollar strength creates headwinds for commodity currencies and emerging market pairs.