Wed, April 17, 2024

US Dollar Dips Below 104, PMIs & Fed’s View in Focus

EUR/USD - Ahead Of The US CPI Release, The Dollar Rises On High Yields

Quick Look

  • The US Dollar dips below 104.00 as risk sentiment improves, influenced by optimistic market events.
  • Upcoming PMIs across major economies set to impact market dynamics.
  • Federal Reserve’s January meeting minutes caution against premature policy easing.
  • Currency movements see EUR/USD and GBP/USD gains, with notable shifts in commodity currencies.
  • Market eyes on Nvidia’s earnings influence and a slew of economic data points for future direction.

Today, the forex market saw the US Dollar fall below the 104.00 mark during Asian trading hours on Thursday, influenced by improved risk sentiment. This sentiment shift is awaiting several forthcoming PMIs, including HCOB Manufacturing and Services PMIs for Germany and the Eurozone, as well as S&P Global/CIPS PMIs for the UK and S&P Global PMIs for the US. These PMIs are expected to offer new insights into the economic conditions of these major economies.

Fed Minutes: Caution Over Policy Easing

The minutes from the Federal Reserve’s January policy meeting showed a unanimous agreement among policymakers on the risks of easing policy too quickly. They stressed the importance of carefully evaluating incoming data to ensure inflation is moving sustainably towards the Fed’s 2% target. Despite a brief uptick in the USD following the release of the minutes, the gains were short-lived, with market sentiment shifting towards risk, encouraged by positive earnings from Nvidia and a 1.5% increase in Nasdaq futures.

US Dollar to Euro Nears 1.0850, GBP & AUD Gain

The EUR/USD pair experienced gains, reaching three-week highs around 1.0850. Meanwhile, the GBP/USD pair also saw an increase, trading above 1.2650. The AUD/USD pair moved towards 0.6600, buoyed by positive PMI data from Judo Bank. This data indicates a growth in momentum for February. In contrast, the USD/CAD pair dropped significantly during the Asian session. Gold (XAU/USD) achieved slight gains, although these were limited by US Treasury yields.

USD Outlook: Bearish Trends & Data Watch

The recent dip in the US Dollar may appear temporary. However, analysis advises caution before predicting a straightforward rally in the USD index. Bearish signals and trends are evident across several currency pairs, including AUD/USD, EUR/USD, and USD/JPY. The future direction of the market will heavily depend on forthcoming economic data and central bank decisions.

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