Will the U.S. Dollar Find a Clear Direction at the FOMC Meeting, or Will It Remain on Hold?

Will the U.S. Dollar Find a Clear Direction at the FOMC Meeting, or Will It Remain on Hold?

14.12.2022

In the U.S. currency market yesterday, the U.S. dollar fell after the U.S. November Consumer Price Index, released yesterday, showed a significant decline to 7.1% from 7.7% the previous month. The EUR/USD pair rose by approximately 140 pips, from 1.0527 to 1.0673.It surged to its highest level since June 9 of this year. From a technical perspective, the EUR/USD pair broke above the 200-day simple moving average (SMA) with a real body candle and has since been rising with support from the 10-day moving average (MA). It will be worth watching to see if the pair enters an uptrend after a period of consolidation.

European currencies saw the EUR/GBP pair, which had been trading slightly lower following yesterday’s release of Germany’s December ZEW Economic Sentiment Survey—which came in at -23.3 versus market expectations of -27.0—enter a seesaw pattern. The EUR/GBP pair fell to 0.8560 before rising to 0.8605.It continued to rise during today’s Asian trading session, touching 0.8615. On the daily chart, the 200-day SMA is acting as support, so we will be watching closely to see if a rebound occurs.

Today’s economic indicators include the UK Consumer Price Index and UK Retail Sales at 16:00, Swiss Producer Import Prices at 16:30, South African Consumer Price Index at 17:00, and at 19:00, EurozoneIndustrial Production, at 21:00 the U.S. MBA Mortgage Applications Index, at 22:30 Canadian Manufacturing Shipments,U.S. Import Price Index at 24:30, U.S. Weekly Crude Oil Inventories at 24:30, the FOMC policy rate decision and statement at 28:00, and a press conference by Fed Chair Powell at 28:30. I plan to watch the situation carefully to see if the FOMC meeting will provide a clear direction for the U.S. dollar.