Concerns over the downside potential of the U.S. dollar, which has been falling alongside declining U.S. Treasury yields

Concerns over the downside potential of the U.S. dollar, which has been falling alongside declining U.S. Treasury yields

24.08.2023

In the U.S. currency market yesterday, the dollar remained weak as the U.S. August Manufacturing and Services PMI, released yesterday, fell sharply from the previous reading of 52.0 to 50.4.With the Japanese yen emerging as the strongest currency yesterday, the USD/JPY pair fell from 145.890 to 144.581, breaking below the 145-yen threshold for the first time since August 11. With major economic indicators scheduled for release during U.S. trading hours today, investors should remain cautious of further declines in the U.S. dollar.

Despite the preliminary August Eurozone consumer confidence index released yesterday showing a deterioration from -15.1 in the previous month to -16.0, the euro rose against the U.S. dollar due to the dollar’s weakness.The EUR/USD pair rose from 1.0802 to 1.0871. On the 4-hour chart, a bullish engulfing candle signaled a recovery to just below the 20-day moving average (MA). On the daily chart, the pair has rebounded after touching the 200-day exponential moving average (EMA), so we will be watching for directional cues during European trading hours.

Today, at 3:45 PM, France’s business sentiment index; at 5:00 PM, the Philippines’ unemployment rate; at 5:30 PM, Hong Kong’s trade balance;at 8:00 PM, the Turkish Central Bank (TCMB) policy rate and statement; at 9:30 PM, U.S. initial jobless claims, U.S. durable goods orders, and the U.S. Chicago Fed National Activity Index; at 11:00 PM, remarks by U.S. Federal Reserve Bank of Philadelphia President Harker; and at 12:15 AM, remarks by U.S. Federal Reserve Bank of Boston President Collins.We must remain highly vigilant regarding the downside potential of the U.S. dollar, which has been falling alongside declining U.S. Treasury yields.