With the U.S. rate hike in line with market expectations, is the U.S. dollar entering a correction phase?

With the U.S. rate hike in line with market expectations, is the U.S. dollar entering a correction phase?

17.03.2022

U.S. currencies traded weakly the previous day, with the euro/dollar rising by about 100 pips from 1.094 to 1.105.Although the U.S. dollar is rising against the yen, it is trading weakly against other currencies, and the “flight to safety” trend of buying the U.S. dollar in times of crisis is beginning to fade. With geopolitical risks, such as the situation in Ukraine, still unresolved, market movements are increasingly reflecting acceptance of the status quo; therefore, we should remain vigilant for a potential correction in the U.S. dollar.

Among European currencies, the euro is surging, with the euro/yen pair rising approximately 189 pips from 129.50 to 131.46.From a technical perspective, the EUR/JPY pair continues to move within the bands along the 10-period moving average on the 4-hour chart. If this upward trend continues, it could reach this year’s high of around 133.15; we will be watching price movements closely as we head into U.S. trading hours.

Today’s schedule includes remarks by ECB President Lagarde at 18:30 European time, the Eurozone Consumer Price Index at 19:00, the Turkish Central Bank (TCMB) policy rate and statement at 20:00, the Bank of England (BOE) policy rate and statement at 21:00, and at 21:30 U.S. time, the CanadianHousing Price Index, U.S. Initial Jobless Claims, U.S. Housing Starts, and the U.S. Philadelphia Fed Business Outlook Index at 21:30 U.S. time; U.S. Industrial Production and U.S. Capacity Utilization at 22:15; and U.S. Weekly Natural Gas Inventories at 23:30.We will carefully assess whether the U.S. dollar will enter a correction phase heading into the weekend.