Market participants are keeping a close eye on the direction of the U.S. dollar, which has been gaining momentum amid expectations of U.S. interest rate hikes.

Market participants are keeping a close eye on the direction of the U.S. dollar, which has been 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 has also been weakening 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 declining as it faces resistance at 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 remain cautious of further declines following the release of economic indicators.

Today, we have the UK’s industrial production, manufacturing output, and trade balance scheduled for 3:00 PM Asia time; Turkey’s current account balance and industrial production at 4:00 PM Europe time; and remarks by Fed Governor Brainard at 3:00 AM US time. We will be closely monitoring the direction of the US dollar, which has been gaining momentum amid expectations of a US interest rate hike.