Will the U.S. dollar react to Fed Chair Powell’s remarks? Caution is advised.

Will the U.S. dollar react to Fed Chair Powell’s remarks? Caution is advised.

10.01.2023

In U.S. currency trading the previous day, the U.S. dollar became the weakest currency during U.S. trading hours, and the EUR/USD pair rose by approximately 120 pips from 1.0636 to 1.0760.The EUR/USD pair continues its upward trend along the 20-period moving average (MA) on the hourly chart and has broken above the recent high of 1.0736 on the 4-hour chart. On the higher time frames—the daily and weekly charts—the RSI is just below 70, indicating there is still room for further gains, so we will be watching for a decline in the U.S. dollar during U.S. trading hours.

European currencies held firm against the Australian dollar, even though Germany’s November industrial production—released yesterday—came in at -0.4% year-over-year, missing the market forecast of 0.1%. The euro rose against the Australian dollar from 1.53885 to 1.5537.The price has recovered to just below the 20-period moving average (MA) on the 4-hour chart. On the daily chart, the 75-period MA is acting as support, so we will be watching closely to see if the euro’s rebound continues for the time being.

Today, at 16:00 European time, Turkey’s unemployment rate and industrial production will be released; at 16:45, France’s industrial production and manufacturing production index will be released; at 18:30, remarks by Bank of England Governor Bailey and Bank of Canada Governor Maclean will be released;at 20:00, South Africa’s manufacturing production and the U.S. NFIB Small Business Optimism Index; during U.S. trading hours at 23:00, remarks by Fed Chair Powell; at 24:00, U.S. wholesale inventories; and at 27:00, a U.S. 3-year Treasury auction.We will carefully assess whether Fed Chair Powell’s remarks will cause the U.S. dollar to move.