Yesterday, the US dollar reinforced its leadership against a range of risk assets after Cleveland Fed President Beth Hammack tied the rise in long-term Treasury yields to a mix of factors: firmer growth prospects, concerns about government debt, and investor expectations for further Fed tightening.

Hammack said at a conference that several forces have come together, noting first that economic indicators appear sufficiently resilient and that this is likely to foster expectations that the pattern will continue. She added that there is also uncertainty about how the Fed might respond and what steps it might need to take, and observed that investors are already pricing in a chance of another rate increase.

The official highlighted that markets are watching the scale of government spending and a rapidly growing federal debt. She also pointed out that the US government now competes for financing with large AI investment projects.

Recall that last week, Fed officials voted unanimously to raise the policy rate by 25 basis points. The median projections published after the meeting show policymakers penciling in one more hike before year-end.

In recent days, several Fed speakers have pointed to signs of economic momentum and a resilient labor market as evidence that further tightening may be needed. Investors, in turn, have increased their expectations, with federal funds futures implying roughly a 65% probability of an October rate hike.

EUR/USD technical outlook

Buyers should consider how to capture 1.1380. Only that would open a test of 1.1410. From there, a move to 1.1430 is possible, though achieving that without support from major players will be difficult. On the downside, I'd expect significant buyer interest only around 1.1360. If bids are absent there, it would be prudent to wait for a new low at 1.1335 or to open long positions from 1.1310.

GBP/USD technical outlook

Pound buyers need to overcome the immediate resistance level of 1.3270 to target 1.3295. Breaking above that level will be challenging, with 1.3320 as the next extended target. On the downside, bears will try to seize control at 1.3230. A break below that level would deal a serious blow to bulls and could push GBP/USD to 1.3200 with scope to test 1.3180.