USD Rally: Atlanta Fed GDPNow Surges to 5.4% for Q4

The US dollar has strengthened across major pairs following the Atlanta Fed's dramatic upward revision of Q4 GDP growth estimates to 5.4% from 2.7% previously. This substantial 2.7 percentage point increase reflects stronger-than-expected economic activity, particularly in consumer spending and business investment sectors. The robust growth projection has immediately impacted forex markets, with EUR/USD declining 0.4% to test support at 1.0780, while USD/JPY surged above 157.50. The unexpectedly strong economic outlook has shifted market expectations for Federal Reserve policy, with traders now pricing in a more hawkish stance and potentially delayed rate cuts in 2026. Technical indicators show the dollar index (DXY) breaking above the 107.00 resistance level, targeting 108.50. This GDP revision reinforces the US economic exceptionalism narrative and could sustain dollar strength in the near term, particularly against currencies from regions showing weaker growth dynamics.