USD Strengthens as US PMI Beats Expectations: Manufacturing Hits 3-Year High

The US dollar received a bullish boost following significantly stronger-than-expected S&P Global PMI data for April. The services index printed at 51.3 versus 50.3 expected, rising from 49.8 prior, while manufacturing surged to 54.0 against 52.5 consensus — its highest reading since May 2022. The composite index climbed to 52.0 from 51.4, comfortably beating the 50.5 forecast. The data paints a picture of resilient US economic activity, particularly in the manufacturing sector, which posted its best performance in nearly four years. However, inflationary pressures are intensifying, with input costs hitting an 11-month high and output prices rising at their fastest pace since July 2022, potentially complicating Federal Reserve rate cut expectations. Employment remained essentially flat for a second consecutive month, suggesting labor market softening. For USD pairs, the combination of strong growth and sticky inflation is supportive of a higher-for-longer Fed rate stance, which could pressure EUR/USD toward lower support levels while lifting USD/JPY. Traders should monitor upcoming Fed commentary for further direction.