The USD Index, which measures the US dollar’s value against a basket of currencies, continued to rise strongly after bouncing back from a seven-week low on Thursday due to a significant drop in equity markets, as disappointing manufacturing PMI data from both the Eurozone and the UK raised concerns about the risk of a looming recession. As a result, global risk sentiment turned negative again, prompting investors to seek shelter in traditional safe-haven assets such as the US dollar.

Earlier this month, the Reserve Bank of Australia gave a dovish signal, hinting that it may pause the rate-hiking cycle next month and the USD’s solid bounce from a seven-week low, driven by a sharp fall in the equity markets. The global risk sentiment has worsened due to disappointing manufacturing PMIs from the Eurozone and the UK, raising concerns about looming recession risks. However, it remains to be seen if the USD bulls can maintain their dominant position, as the Fed sounded cautious about the outlook in the wake of recent turmoil in the banking sector, indicating a less hawkish outlook.