Dollar Continues Rally, EUR/USD and Franc Under Pressure

The dollar extended its rally this week, building on gains from the previous period. Last week's Middle East crisis gave the greenback a short-lived safe-haven boost. That support faded quickly. The focus has now returned to the euro, which fell again. EUR/USD dropped toward the 1.1420 level, a fresh support. The pair had been capped at 1.1600 resistance. Inflation is creeping higher in both the US and Europe. The next few data releases will give traders a clearer read on the rate path. If US inflation stays hot, the dollar could hold its gains. If European prints surprise, the euro might stage a recovery.

The Swiss franc is also losing ground against the dollar. USD/CHF jumped more than 150 pips in recent sessions. Geopolitical risk earlier had sent the dollar soaring as investors waited for the next catalyst. Now the pair is testing the psychological level at 0.8100. A break above that mark would open the way to 0.8200. On the downside, a move back below the previous swing low at 0.7900 would signal a failed breakout and a return to the prior range.

Equities kept their upward momentum. The S&P 500 pushed to another fresh high as tech stocks led the charge. Investors appeared to shake off lingering geopolitical concerns and instead pinned their hopes on a Federal Reserve rate cut in the third quarter. The index is targeting 7650 to the upside, with 7000 serving as the nearest support. The next major test for the market is the inflation data due later this month, which could either reinforce the rate-cut narrative or push it further out.