Will the market wait and see which direction the U.S. dollar takes following Fed Chair Powell’s remarks cautioning against monetary easing?

Will the market wait and see which direction the U.S. dollar takes following Fed Chair Powell’s remarks cautioning against monetary easing?

04.12.2023

In the U.S. currency markets last weekend, the U.S. dollar rose against the euro after Federal Reserve Chair Powell stated in a speech on the 1st that “while inflation is above target, it is too early to discuss the timing of monetary easing.”The EUR/USD pair fell from 1.0912 to 1.0828, continuing its decline along the 20-period moving average (MA) on the hourly chart. Since the pair briefly dipped below the 20-period MA on the daily chart, it will be worth watching whether the U.S. dollar strengthens against the euro at the start of the week.

European currencies saw the euro fall against the yen, despite the final reading of Germany’s November manufacturing PMI—released last weekend—showing a slight improvement to 42.6 from 42.3 the previous month. The euro/yen pair fell by approximately 2.1 yen, from 161.760 to 159.644.The euro became the weakest currency. From a technical perspective, the euro/yen pair has formed a lower high on the daily chart, with a large bearish candle extending from just below the 20-day moving average (MA) to the 75-day MA. Since the daily RSI has been trending downward after touching 70, traders should remain cautious as to whether the euro’s decline will continue.

Today’s schedule includes Germany’s trade balance at 16:00, Turkey’s consumer price index and producer price index at 16:30, Switzerland’s consumer price index at 17:00, Brazil’s consumer price index at 18:30, the Eurozone investor sentiment index at 20:30, and at 20:30, the UK’sremarks by MPC member Dingra, at 21:00 Mexico’s total fixed capital formation, at 23:00 remarks by ECB President Lagarde, at 24:00 U.S. new manufacturing orders and U.S. durable goods orders, at 25:30 a U.S. 6-month Treasury bill auction,and at 30:00, South Korea’s foreign exchange reserves are scheduled to be released. I intend to carefully monitor the direction of the U.S. dollar, which has risen following Fed Chair Powell’s remarks cautioning against monetary easing.