All eyes are on whether the U.S. dollar will strengthen following the release of the University of Michigan Consumer Sentiment Index

All eyes are on whether the U.S. dollar will strengthen following the release of the University of Michigan Consumer Sentiment Index

12.05.2023

In the U.S. currency market yesterday, the U.S. dollar rose against the euro after the April U.S. Producer Price Index, released yesterday, came in at 2.3% year-over-year, marking its 10th consecutive monthly decline.The EUR/USD pair fell by just under 100 pips from 1.0997 to 1.0900, breaking below the daily 20-day moving average. The daily RSI for EUR/USD has been declining following a divergence near the 70 level, and the 4-hour RSI still has room to fall toward 30. We should watch closely to see if economic data releases during U.S. trading hours trigger further declines in the EUR/USD pair.

Among European currencies, the Swiss franc fell against the U.S. dollar. The USD/CHF pair rose by approximately 808 pips from 0.8873 to 0.8957. It has broken above the 20-period moving average (MA) on the 4-hour chart. On the higher-timeframe daily chart, the USD/CHF has broken above the 20-period MA and is trending higher, with successive higher lows. We will be watching closely to see if the Swiss franc’s strength takes a breather and the U.S. dollar stages a comeback.

Today’s schedule includes UK Q1 GDP, UK Industrial Production, UK Manufacturing Output, and UK Trade Balance at 3:00 PM; France’s Consumer Price Index at 3:45 PM; remarks by Fed Governor Bowman at 4:00 PM; remarks by MPC Member Pill at 8:15 PM; India’sCPI, at 9:30 PM: US Import/Export Price Index, at 11:00 PM: US University of Michigan Consumer Sentiment Index, and at 3:20 AM: Remarks by the President of the San Francisco Fed. I intend to watch the situation carefully to see if the US dollar strengthens following these US-time economic releases.