Market Participants May Be Wary of Further Downside Potential for the U.S. Dollar, Which Fell Lacking Support from Key Officials' Remarks

Market Participants May Be Wary of Further Downside Potential for the U.S. Dollar, Which Fell Lacking Support from Key Officials' Remarks

21.04.2023

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

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

Today, UK retail sales will be released at 15:00 during Asian trading hours, followed by French manufacturing and services PMIs at 16:15 during European trading hours, German manufacturing and services PMIs at 16:30, Eurozone manufacturing and services PMIs at 17:00, and UKmanufacturing and services PMIs, Canadian retail sales at 21:30 during U.S. trading hours, U.S. manufacturing and services PMIs at 22:45, and remarks by Fed Governor Cook at 29:35. 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.