Attention is likely to focus on the weak U.S. dollar and Fed Chair Powell’s congressional testimony

Attention is likely to focus on the weak U.S. dollar and Fed Chair Powell’s congressional testimony

15.07.2021

Yesterday, the three major U.S. stock indices showed mixed performance, resulting in a market environment characterized by flat stock prices, lower interest rates, and a weaker U.S. dollar.Gold rose and is trading around $1,830. The VIX (fear index) fell back, dropping to 16.3. In his testimony before the U.S. Congress yesterday, Powell maintained his stance that "inflation is transitory" and remained cautious about transitioning to tapering.

In the foreign exchange market, the EUR/JPY pair is declining as its upside is capped by the 20-period moving average on the hourly chart. After peaking at 131.08 on Tuesday, the 13th, the pair fell to 129.89 during today’s Asian trading session, breaking below the key psychological level of 130.00. If the decline continues, there is no support until around this month’s low of 129.6, so we should remain vigilant about the possibility of further declines.

Today, at 9:30 PM, we have the U.S. initial jobless claims, the U.S. New York Fed Manufacturing Index, the U.S. Philadelphia Fed Business Outlook Index, and the U.S. Import Price Index; at 10:00 PM, Canadian existing home sales; at 10:15 PM, U.S. industrial production and the U.S. capacity utilization rate;at 10:30 PM, Fed Chair Powell’s Congressional Testimony, and at 12:00 AM, remarks by Chicago Fed President Evans. We will be closely monitoring these events to see if they help determine the direction of the U.S. dollar, which is currently the focus of attention.