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The information provided on EL7.AI is for educational and informational purposes only and does not constitute financial advice.
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Sign InThe US Dollar rallied sharply, ending its recent correction phase after domestic inflation data exceeded market expectations. According to reports, the US Consumer Price Index (CPI) for April came in at 3.8% year-over-year, surpassing the 3.7% consensus. This momentum, coupled with persistent geopolitical uncertainty, caused major currency pairs including EUR/USD and GBP/USD to reverse their recent gains.
The rally is supported by oil prices reaching triple-digit levels due to the ongoing conflict in the Strait of Hormuz, which has renewed demand for the Dollar as a safe haven. Per market data, the Euro faced additional pressure following mixed Services PMI readings across the bloc, with Spain at 47.9 and Italy at 49.8 in May 2026, indicating contraction compared to the relative resilience of US labor metrics.
Traders are currently monitoring key levels following US Initial Jobless Claims which came in at 200k (close May 7, 2026). Looking ahead, the market will focus on upcoming catalysts in the economic calendar, specifically speeches from Fed officials Goolsbee and Hammack, to gauge the 'higher-for-longer' interest rate trajectory in light of sticky inflation.
Update: Investors are now focusing on an upcoming summit between Presidents Trump and Xi Jinping scheduled for later this week, which has limited a full rotation into defensive positioning. Despite the inflation-driven Dollar strength, overall risk appetite remains resilient as traders hesitate to fully embrace hedges ahead of the high-stakes meeting.