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The Dollar's strong start to the new week was given a fresh boost following the release of a U.S. economic survey that confirmed a strong start to the year.

The U.S. ISM services PMI for January read at 53.4, up from December's 50.5 and surpassing the estimate for 52.

In a significant improvement, the survey's employment index rose to 50.5 from 42.8 and confirmed to markets that the U.S. labour market is in rude health.

"The USD is rallying after yet another set of strong data. After a much higher-than-expected non-farm payrolls print on Friday, today’s ISM services survey beat expectations as well, with stronger data across almost all subcomponents," says Dominic Bunning, Head of European FX Research at HSBC.

The data follows hot on the heels of Friday's non-farm payroll report that blew estimates away and all but eliminated the odds of a March rate cut at the Fed.

The Dollar surged in the wake of Friday's release, and Monday's strong ISM reading, which confirms the non-farm payroll report was no anomaly, has put a fire in the Dollar's belly.

The Pound is one of the biggest losers of the past two trading days, with the Pound to Dollar exchange rate now 1.75% lower at 1.2522.

The Euro to Dollar exchange rate is down 1.30% over the past two days at 1.0728.

Looking ahead, HSBC says it will be hard to stop the Dollar.

"The ongoing strength of the US economy relative to most of its G10 peers is one of the key reasons why we have held a counter consensus bullish view on the USD since September 2023," says Bunning.

The strength of U.S. data suggests there is little reason for the Federal Reserve to cut interest rates for the foreseeable future, which can help support U.S. bond yields and the Dollar.

"As such, we see rate pricing in the US being more prone to upside than downside for now. The USD has already broken free from its recent ranges, and is at its highest since November last year using the DXY measure. If current economic momentum persists, there is little reason to think we will see a reversal to the weak side any time soon," says Bunning.