U.S. Dollar Hits 5-Day Winning Streak Amid Strong Data and Fed Hike Hopes

The U.S. Dollar is on track for its longest winning streak since February, fueled by a series of robust economic data points that have reinforced expectations of continued strength in the greenback. The Bloomberg Dollar Spot Index has risen for five consecutive trading days, reaching a level not seen since June 23. This upward momentum is being driven by strong readings on U.S. economic activity, including a rebound in Q2 growth and a rise in the core PCE price index to 2.5% year-on-year, reinforcing the Federal Reserve's hawkish stance. The ADP private sector employment data further underscored the resilience of the labor market, contributing to the dollar’s rally [1].

Market participants are interpreting these developments as signals that the Fed may slow or delay future rate cuts. Valentin Marinov, head of G10 currency strategy at Credit Agricole CIB, noted that if Fed Chair Jerome Powell maintains a neutral policy outlook, the dollar’s interest rate appeal could strengthen further [1]. This sentiment is reflected in the dollar’s performance against the Canadian Dollar, where the USD/CAD pair has extended its winning streak to three sessions and approached key resistance levels, indicating technical strength that aligns with the broader macroeconomic backdrop [6].

The dollar’s rise has occurred against a backdrop of mixed signals in equity markets. The S&P 500 recently broke its winning streak amid earnings pressures and heightened expectations around Fed policy, leading to a shift in investor behavior. Some market participants are now viewing the U.S. Dollar as a potential safe-haven asset amid uncertainties in global economic growth and trade dynamics. This shift reflects a broader repositioning of risk and liquidity in global markets [1].

While the near-term outlook for the dollar appears strong, analysts caution against overestimating its long-term prospects. The trajectory of the currency will depend on the evolving economic data and monetary policy decisions by central banks, particularly the Federal Reserve. As policy expectations are shaped by communication and market conditions, the dollar’s performance is likely to remain closely tied to these broader developments [4].

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[1] title1 (https://londonlovesbusiness.com/sp-500-us500-breaks-historic-winning-streak-amid-earnings-pressure-and-fed-anticipation/)

[4] title4 (https://www.morningstar.com/markets/where-should-investors-look-next-among-economic-mixed-messages-2)

[6] title6 (https://www.mitrade.com/insights/news/live-news/article-1-991155-20250728)