US Dollar Bulls Back in Charge? Greenback Climbs Ahead of Critical Data Week
US dollar rose by 0.77% last week, ending the last 3-week downtrend.
US Employment data released last week came in above expectations, showing that the labor force remains strong. This led to a slight change in the interpretations about the path of interest rate policy in the coming year Fed and finally, a partial upward movement was seen in the US dollar and bond yields last week.
This week's data releases and messages from central banks may cause volatility in the forex market. First of all, US CPI data will be followed tomorrow. Core inflation is expected to remain stable at 4% on an annual basis, while CPI is expected to fall slightly to 3.1%.
Following the strong employment data, the CPI is also expected to be above expectations, which may lead to a more hawkish tone in the Fed's speech, even though it is certain that the Fed will leave interest rates unchanged this month. This would lead the market to extend its expectations for the pivot rate period and thus the dollar could strengthen further into the new year.
In recent weeks, a correction phase in the dollar took place as speculation accelerated that the Fed might cut interest rates in the first quarter of the year. However, the expectation of a rate cut was pushed back to after the 3rd quarter of 2024 after the latest data, which weakened the correction phase in the dollar index.
Nevertheless, this week's data and the results of the meetings of the European Central Bank, the Bank of England, Norges Bank, and the Swiss National Bank, along with the Fed, may be decisive for the direction of the index.
If we look at the DXY from a technical point of view; The first striking view is that the retreat that started from the 107 band lasted until the 102 level and was
Read more on investing.com
