Market participants may be wary of further downside potential for the U.S. dollar, which fell despite supportive comments from key officials

Market participants may be wary of further downside potential for the U.S. dollar, which fell despite supportive comments from key officials

21.04.2023

In yesterday’s U.S. currency markets, the U.S. dollar fell despite hawkish comments from Cleveland Fed President Mester, who stated that “further monetary tightening is necessary.” The USD/JPY pair dropped by just over 1 yen, from 134.974 to 133.803. It is currently hovering just below the 200-period SMA on the hourly chart, suggesting the downtrend may continue.On the 4-hour chart, USD/JPY has broken below the trend line supported by the 20-period moving average, so we should pay close attention to the direction of the US dollar during US trading hours.

European currencies fell against the yen after yesterday’s release of the seasonally adjusted EU trade balance for February, which improved to a deficit of €100 million from the previous month’s deficit of €11.3 billion.The euro/yen pair fell from 147.860 to 146.634. It has pulled back from touching the 70 level on the daily RSI. On the daily chart, it has pulled back from the +2σ line of the Bollinger Bands, but since it remains above the 10-day moving average, we will be watching price action during U.S. trading hours.

Today, UK retail sales are scheduled for 15:00 during Asian trading hours, followed by French manufacturing and services PMIs at 16:15, German manufacturing and services PMIs at 16:30, Eurozone manufacturing and services PMIs at 17:00, UK manufacturing and services PMIs at 17:30, and Canadian retail sales at 21:30 during US trading hours.U.S. Manufacturing/Services PMI at 10:45 PM, and remarks by Fed Governor Cook at 1:35 AM. We should be wary of further downside potential for the U.S. dollar, which has fallen despite a lack of support from key officials’ remarks.