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

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

04.12.2023

Last weekend, the U.S. dollar rose against the euro after Federal Reserve Chair Powell stated during 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 temporarily dipped below the 20-period MA on the daily chart, we will be watching to see if the U.S. dollar strengthens against the euro at the start of the week.

Despite a slight improvement in Germany’s final November manufacturing PMI—released last weekend—from 42.3 in the previous month to 42.6, the euro fell against the yen.The euro/yen pair fell by approximately 2.1 yen, from 161.760 to 159.644. The euro became the weakest currency. Technically, 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, we should remain cautious as to whether the euro’s decline will continue.

Today’s schedule includes: Germany’s trade balance at 4:00 PM, Turkey’s consumer price index and producer price index at 4:30 PM, Switzerland’s consumer price index at 5:00 PM, Brazil’s consumer price index at 6:00 PM, the Eurozone investor sentiment index at 6:30 PM, remarks by UK MPC member Dingra at 8:30 PM, Mexico’s gross fixed capital formation at 9:00 PM,at 11:00 PM: ECB President Lagarde’s remarks; at 12:00 AM: U.S. new manufacturing orders and U.S. durable goods orders; at 1:30 AM: U.S. 6-month Treasury bill auction; and at 3:00 AM: South Korea’s foreign exchange reserves. 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.