Should investors be wary of the U.S. dollar's relentless slide?

Should investors be wary of the U.S. dollar's relentless decline?

14.01.2022

Yesterday, the three major U.S. stock indices all fell, creating a full-blown risk-off market characterized by falling stock prices, falling oil prices, and falling interest rates. Gold also fell back to $1,724, and BTC/USD is similarly trending lower. The yield on the 10-year U.S. Treasury note has dropped to 1.72%.

In the foreign exchange market, the U.S. dollar has lost momentum due to a decline in the Dollar Index. The EUR/USD pair has risen and is testing resistance near its recent highs. The EUR/USD is currently trading around 1.147, with the 20-period moving average on the hourly chart continuing to provide support. From a technical perspective, there are no major resistance levels until the 200-period exponential moving average on the daily chart at 1.159, so we will need to monitor the situation closely to see if the upward trend continues.

Today’s schedule includes UK GDP and the UK trade balance at 16:00 European time, the French Consumer Price Index (final reading) at 16:45, and the Eurozone trade balance at 19:00; followed by remarks by ECB President Lagarde at 22:30 U.S. time, U.S. retail sales,U.S. Import Price Index, at 23:15 U.S. Industrial Production and U.S. Capacity Utilization, at 24:00 U.S. University of Michigan Consumer Sentiment Index (Preliminary), U.S. Business Inventories, and at 25:00 remarks by U.S. Federal Reserve Bank of New York President Williams. We should pay close attention to the direction of the U.S. dollar, as its downward momentum shows no signs of abating.