Market Participants to Keep a Close Eye on the Direction of the U.S. Dollar Following Stronger-than-Expected Economic Data

Market Participants to Keep a Close Eye on the Direction of the U.S. Dollar Following Stronger-than-Expected Economic Data

27.03.2023

Last weekend, the U.S. dollar strengthened against the euro despite a decline in February durable goods orders that went against market expectations, as the March Composite PMI (Purchasing Managers’ Index), released on the same day, came in at 53.3, remaining above the benchmark of 50.The EUR/USD pair fell from 1.0837 to 1.0714. The decline halted upon touching the 200-period SMA on the hourly chart. On the 4-hour chart, the 75-period MA is acting as support, and on the daily chart, the 200-period SMA through the 10-period MA forms a “perfect order.”Since no particular divergence is visible on the weekly RSI, we should keep an eye on the strength of the U.S. dollar.

European currencies fell against the U.S. dollar as the British pound weakened following the release on the 24th of the UK’s preliminary February manufacturing and services PMI figures, which showed a decline from the previous month. The GBP/USD pair fell from 1.2291 to 1.2191, dropping to the -2σ level of the 4-hour Bollinger Bands.From a technical perspective, since a divergence has formed after the RSI exceeded 70, we should remain cautious about the possibility of a full-scale pullback.

Today's economic indicators include Sweden's trade balance at 15:00,at 16:00, Turkey’s capacity utilization rate; at 17:00, Germany’s Ifo Business Climate Index; at 17:30, remarks by Nagel, President of the German Federal Bank; at 19:00, Israel’s unemployment rate; at 20:00, the UK’s CBI Retail Sales;Mexico’s trade balance at 23:30, the Dallas Fed Manufacturing Index at 24:30, remarks by Bank of England Governor Bailey at 26:00, and remarks by Federal Reserve Governor Jefferson at 6:00 the following day.I want to carefully observe the direction of the U.S. dollar, which has strengthened on the back of these economic indicators.