Should we keep a close eye on the direction of the U.S. dollar, which is gaining momentum amid expectations of U.S. interest rate hikes?

Should we keep a close eye on the direction of the U.S. dollar, which is gaining momentum amid expectations of U.S. interest rate hikes?

13.06.2022

Last weekend, U.S. currencies rose across the board following the release of the U.S. May Consumer Price Index (CPI), which came in higher than expected.The GBP/USD pair fell by more than 250 pips, from 1.2516 to 1.2262. The price action suggests it may be heading toward last month’s low of 1.2153. Concerns are mounting that the rise in the U.S. CPI from 8.3% the previous month to 8.6% will accelerate the pace of U.S. interest rate hikes.

Like the pound, the euro also weakened against the U.S. dollar, with the EUR/USD pair falling approximately 160 pips from 1.0642 to 1.0475.The EUR/USD pair is falling as it is capped by the 75-day moving average on the daily chart, and since the RSI has not reached 30 and is hovering around 38.5, we should be on guard for further declines following the release of economic indicators.

Today, at 15:00 during Asian trading hours, the UK’sIndustrial Production, UK Manufacturing Output, and the UK Trade Balance; at 16:00 during European trading hours, Turkey’s Current Account Balance and Industrial Production; and at 27:00 during U.S. trading hours, remarks by Fed Governor Brainard.We will be closely monitoring the direction of the U.S. dollar, which has been gaining momentum amid expectations of a U.S. interest rate hike.