The US dollar is under pressure as the pound, and euro attempt a recovery, raising doubts about its upward trajectory.
The dollar's recent easing is due to a minor rebound in risk appetite, a lack of new information in the FOMC meeting minutes, and concerns about potential disappointment in upcoming US data.
Attention has now turned to US employment data and inflation figures. Technical analysis suggests the dollar's recovery may face resistance at the 102.38–102.50 area.
After a stronger start to the year, the US dollar is coming under a bit of pressure, as pound and euro all attempt to make a recovery after their poor start to 2024.
Important employment data is on tap for the remainder of this week before the focus turns to inflation data next week. Is the dollar about to resume lower?
In part, because of a small recovery in risk appetite with European markets and US futures bouncing back.
The dollar has also been undermined by the fact the FOMC’s meeting minutes that were released yesterday hardly contained any new information the market was already aware of.
While the ISM manufacturing PMI was more or less in line at 47.4, with activity in the sector remaining in contraction for yet another month (14 consecutive times).
Investors are also wary of the potential for this week’s other key US data to disappoint, or at least not beat expectations so significantly that they help to push back rate-cut expectations.
Meanwhile, we have also seen some improvement in foreign data, with Eurozone final PMIs being unexpectedly revised higher, a day after German and Spanish employment data topped expectations.
This has helped to underpin the euro and undermine the dollar index (EUR has the largest weighting on DXY at 57.6%).
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