Market participants may be on alert for volatility in the U.S. dollar following false reports of a massive explosion at the Pentagon

Market participants may be on alert for volatility in the U.S. dollar following misinformation about a massive explosion at the Pentagon

23.05.2023

In the previous day’s U.S. currency trading, the U.S. dollar plummeted against the yen following reports of a massive explosion near the Pentagon. The USD/JPY pair fell sharply by just under 70 pips, dropping from 138.664 to 137.994. However, once it became clear that the explosion was a false alarm, the USD/JPY pair instantly rebounded, recovering to 138.664.The USD/JPY pair has posted two consecutive bullish candles on the weekly chart, and since the weekly RSI continues to indicate a reversal, traders should watch for a rebound following a corrective decline.

European currencies saw the euro trade in a tight range against the U.S. dollar after the Eurozone’s May consumer confidence index, released yesterday, came in at -17.4, up slightly from -17.5 the previous month.The EUR/USD pair fluctuated between 1.0795 and 1.0831. Technically, the EUR/USD is in a downtrend, facing resistance at the 20-period moving average (MA) on the 4-hour chart. However, on the weekly chart, the price is positioned just below the 20-period MA, so traders should remain highly vigilant regarding the downside potential should the price break below the weekly 20-period MA.

Today’s schedule includes the French Manufacturing/Services PMI at 4:15 PM, the German Manufacturing/Services PMI at 4:30 PM, the Eurozone Manufacturing/Services PMI at 5:00 PM, the UK Manufacturing/Services PMI at 5:30 PM, remarks by Bank of England Governor Bailey at 6:15 PM, and the CanadianIndustrial Product Prices, at 10:00 PM US time: Remarks by Logan, President of the Dallas Fed, at 10:45 PM US time: US Manufacturing/Services PMI, at 11:00 PM US time: US New Home Sales and the Richmond Fed Manufacturing Index, at 2:00 AM US time: US 2-Year Treasury Auction, and at 2:50 AM US time: Remarks by Nagel, President of the German Bundesbank.We should remain cautious regarding the volatile movements of the U.S. dollar, which has been driven by misinformation regarding a massive explosion at the Pentagon.