With the U.S. dollar’s strength taking a breather, should we wait and see if currency strength dynamics will shift?

With the U.S. dollar’s strength taking a breather, should we wait and see if currency strength dynamics will shift?

29.09.2023

In the previous day’s U.S. currency trading, the U.S. dollar paused and weakened after Chicago Fed President Goolsbee expressed a dovish view, stating that “overemphasizing the classic relationship between inflation and the unemployment rate could pose risks.” The USD/JPY pair fell from 149.620 to 149.138.Although the pair has held above the key 149-yen level, resistance has strengthened. As today is the last day of the month, we need to remain vigilant for any potential correction in the U.S. dollar.

Despite the fact that Germany’s preliminary September CPI, released yesterday, fell to 4.5% year-over-year from 6.1% the previous month, the euro rose against both the yen and the U.S. dollar. The euro/yen pair rose from 156.708 to 157.877.During today’s Asian trading session, the pair continues to move higher. We will carefully assess whether the euro will maintain its strength against the yen, leading to a trend of yen weakness.

Today, at 15:00: UK current account balance and GDP; Germany’s import price index and retail sales;South Africa’s money supply at 3:00 PM; France’s Producer Price Index and Consumer Price Index at 3:45 PM; Switzerland’s KOF Leading Index at 4:00 PM; a statement by ECB President Lagarde at 4:40 PM; Germany’semployment report, at 18:00: the Eurozone Consumer Price Index; at 21:30: Canada’s GDP, U.S. personal income, and U.S. wholesale inventories; at 22:45: the U.S. Chicago Purchasing Managers’ Index; and at 23:00: the U.S. University of Michigan Consumer Sentiment Index.We will carefully assess whether the current stability in currency strength—following a pause in the U.S. dollar’s rise—will change.