USD Faces Critical Junction: AI Investment Boom vs Economic Reality

The US Dollar is experiencing a pivotal moment as markets weigh artificial intelligence investment optimism against underlying economic fundamentals. EUR/USD trades at 1.0845, consolidating in a tight range as traders assess conflicting signals. The dollar has gained support from AI-driven capital flows into US tech stocks, attracting international investment and boosting USD demand. However, economic gravity presents challenges, with manufacturing PMI data showing continued contraction and service sector growth moderating. USD/JPY holds above 149.00 despite intervention risks, while AUD/USD struggles near 0.6650 on commodity weakness. NZD/USD remains pressured at 0.6020 amid RBNZ dovish signals. Technical analysis reveals the DXY trapped between 99.50 support and 100.50 resistance, with a breakout likely determining near-term direction. The market awaits clarity on whether AI investment enthusiasm can overcome traditional economic indicators in driving dollar performance.