US Dollar Declines Slightly Following Powell's Remarks; Bonds in Demand
Powell's Dovish Tone: Powell's recent comments indicated a more dovish stance compared to the FOMC press conference, highlighting risks to the jobs market and suggesting it is no longer solid.
Market Reactions: The FX market saw mild US dollar selling, allowing the euro to approach its daily highs, while bond markets experienced a slight decrease in yields, reflecting a dovish sentiment overall.
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Indian Rupee's Decline Appears to Be Restarting Following a Significant Technical Breakout. What Lies Ahead?
USD Performance: The US dollar is strengthening against major currencies due to strong economic data and US-Iran tensions, with expectations of limited rate cuts from the Federal Reserve unless inflation improves significantly.
INR Developments: The Indian Rupee is on a bearish trend against the US dollar, but recent trade agreements and rising inflation have provided a temporary boost, with potential for further gains depending on the US Supreme Court's decision on tariffs.
Technical Analysis - Daily: The USDINR pair is consolidating at the lower channel bound, with bullish momentum building as buyers target a rally towards the 93.00 level, while sellers aim for new lows below the channel.
Upcoming Economic Indicators: Key economic indicators to watch include the US Q4 GDP, PCE price index, Flash PMIs, and the Supreme Court's ruling on tariffs, which could impact both the USD and INR.
USDJPY Set to Approach Intervention Level as Japanese Yen Struggles for Bullish Support
USD Performance: The US dollar is strengthening against major currencies due to strong economic data and ongoing US-Iran tensions, with expectations of limited rate cuts from the Federal Reserve unless inflation improves significantly.
JPY Market Reaction: Following Takaichi's election victory, the Japanese yen experienced a sell-off, but the Bank of Japan's recent policy meeting indicated no immediate rate hikes, with potential tightening expected in June if economic conditions support it.
USDJPY Technical Analysis: The USDJPY pair shows bullish momentum on daily and 4-hour charts, with a potential descending triangle formation, while the 1-hour chart indicates a support zone around 154.60, suggesting buyers may remain in control barring major news.
Upcoming Economic Indicators: Key economic data releases today include the US Q4 GDP, PCE price index, Flash PMIs, and a potential Supreme Court ruling on Trump's tariffs, which could impact the US dollar's performance.
USD Rises on Robust US Data, But Gains May Be Short-Lived Due to Policy Uncertainty and Political Risks
Dollar Strength and Economic Data: MUFG's Derek Halpenny indicates that the recent strength of the U.S. dollar, driven by positive economic data and cautious Fed minutes, is unlikely to be sustained.
Political Uncertainty Impact: Halpenny highlights that investor sentiment towards the dollar remains fragile due to political uncertainty and concerns about the independence of the Federal Reserve under President Trump.
Criticism of Fed Analysis: National Economic Council Director Kevin Hassett's criticism of the New York Fed's tariff analysis exemplifies potential White House interference, which could undermine investor confidence.
Volatility and Structural Risks: While positive economic indicators may provide temporary support for the dollar, ongoing structural and political risks are expected to contribute to market volatility and limit long-term gains.
Australian Dollar Faces Challenges Despite Robust Employment Data: Is a Significant Decline Ahead?
US Dollar Performance: The US dollar is strengthening against major currencies due to positive US economic data and high expectations for interest rate stability, despite market pricing in potential easing by year-end.
AUD Market Dynamics: The Australian dollar struggled to maintain gains following a strong jobs report, with traders anticipating a peak in hawkish sentiment and requiring hot CPI data for further upside.
AUDUSD Technical Analysis: The AUDUSD pair is currently consolidating, with key support at 0.7027 and resistance at 0.7090; a break below support could lead to further declines towards 0.69.
Upcoming Economic Indicators: Key economic data releases are expected, including US Jobless Claims, Q4 GDP, PCE price index, Flash PMIs, and a potential Supreme Court ruling on Trump’s tariffs, alongside monitoring US-Iran tensions.
Analysts Suggest EUR/USD Likely to Rise Due to Weaker Dollar
Market Analysts' Views on EUR/USD: Analysts suggest that the EUR/USD currency pair is currently in a comfortable range for the ECB, particularly between 1.16 and 1.18, with potential complications if it approaches 1.20.
Goldman Sachs' Outlook: Goldman Sachs forecasts further upside for EUR/USD, expecting it to benefit from ongoing trends in FX markets, particularly in the context of broad dollar depreciation.
Morgan Stanley's Perspective: Morgan Stanley agrees that risks for EUR/USD are skewed to the upside, but advises caution, suggesting that a pullback below 1.1750 would present a more attractive entry point for long positions.
De-dollarisation Narrative: Both firms highlight the ongoing de-dollarisation narrative as a significant factor influencing the EUR/USD dynamics, particularly in the first half of the year.
New Zealand Dollar Declines Broadly as RBNZ Fails to Meet Hawkish Expectations
USD Overview: The US dollar is trading sideways following a strong NFP report and soft CPI data, with market expectations for 60 bps of rate cuts by year-end; significant data releases are anticipated this week, including US Flash PMIs and Q4 GDP.
NZD Reaction: The NZD fell after the RBNZ maintained the OCR at 2.25%, disappointing hawkish expectations and focusing on economic weaknesses rather than inflation concerns.
NZDUSD Technical Analysis: On the daily chart, NZDUSD is consolidating near highs, while the 4-hour chart shows a key support level at 0.5995, with potential for buyers to target 0.61 or sellers to aim for a drop to 0.5927.
Upcoming Economic Events: Key upcoming events include the FOMC Meeting Minutes, US Jobless Claims, and significant data releases on Friday, including US Q4 GDP and the PCE price index.
Indian Rupee's Decline Appears to Be Restarting Following a Significant Technical Breakout. What Lies Ahead?
USD Performance: The US dollar is strengthening against major currencies due to strong economic data and US-Iran tensions, with expectations of limited rate cuts from the Federal Reserve unless inflation improves significantly.
INR Developments: The Indian Rupee is on a bearish trend against the US dollar, but recent trade agreements and rising inflation have provided a temporary boost, with potential for further gains depending on the US Supreme Court's decision on tariffs.
Technical Analysis - Daily: The USDINR pair is consolidating at the lower channel bound, with bullish momentum building as buyers target a rally towards the 93.00 level, while sellers aim for new lows below the channel.
Upcoming Economic Indicators: Key economic indicators to watch include the US Q4 GDP, PCE price index, Flash PMIs, and the Supreme Court's ruling on tariffs, which could impact both the USD and INR.
USDJPY Set to Approach Intervention Level as Japanese Yen Struggles for Bullish Support
USD Performance: The US dollar is strengthening against major currencies due to strong economic data and ongoing US-Iran tensions, with expectations of limited rate cuts from the Federal Reserve unless inflation improves significantly.
JPY Market Reaction: Following Takaichi's election victory, the Japanese yen experienced a sell-off, but the Bank of Japan's recent policy meeting indicated no immediate rate hikes, with potential tightening expected in June if economic conditions support it.
USDJPY Technical Analysis: The USDJPY pair shows bullish momentum on daily and 4-hour charts, with a potential descending triangle formation, while the 1-hour chart indicates a support zone around 154.60, suggesting buyers may remain in control barring major news.
Upcoming Economic Indicators: Key economic data releases today include the US Q4 GDP, PCE price index, Flash PMIs, and a potential Supreme Court ruling on Trump's tariffs, which could impact the US dollar's performance.
USD Rises on Robust US Data, But Gains May Be Short-Lived Due to Policy Uncertainty and Political Risks
Dollar Strength and Economic Data: MUFG's Derek Halpenny indicates that the recent strength of the U.S. dollar, driven by positive economic data and cautious Fed minutes, is unlikely to be sustained.
Political Uncertainty Impact: Halpenny highlights that investor sentiment towards the dollar remains fragile due to political uncertainty and concerns about the independence of the Federal Reserve under President Trump.
Criticism of Fed Analysis: National Economic Council Director Kevin Hassett's criticism of the New York Fed's tariff analysis exemplifies potential White House interference, which could undermine investor confidence.
Volatility and Structural Risks: While positive economic indicators may provide temporary support for the dollar, ongoing structural and political risks are expected to contribute to market volatility and limit long-term gains.
Australian Dollar Faces Challenges Despite Robust Employment Data: Is a Significant Decline Ahead?
US Dollar Performance: The US dollar is strengthening against major currencies due to positive US economic data and high expectations for interest rate stability, despite market pricing in potential easing by year-end.
AUD Market Dynamics: The Australian dollar struggled to maintain gains following a strong jobs report, with traders anticipating a peak in hawkish sentiment and requiring hot CPI data for further upside.
AUDUSD Technical Analysis: The AUDUSD pair is currently consolidating, with key support at 0.7027 and resistance at 0.7090; a break below support could lead to further declines towards 0.69.
Upcoming Economic Indicators: Key economic data releases are expected, including US Jobless Claims, Q4 GDP, PCE price index, Flash PMIs, and a potential Supreme Court ruling on Trump’s tariffs, alongside monitoring US-Iran tensions.
Analysts Suggest EUR/USD Likely to Rise Due to Weaker Dollar
Market Analysts' Views on EUR/USD: Analysts suggest that the EUR/USD currency pair is currently in a comfortable range for the ECB, particularly between 1.16 and 1.18, with potential complications if it approaches 1.20.
Goldman Sachs' Outlook: Goldman Sachs forecasts further upside for EUR/USD, expecting it to benefit from ongoing trends in FX markets, particularly in the context of broad dollar depreciation.
Morgan Stanley's Perspective: Morgan Stanley agrees that risks for EUR/USD are skewed to the upside, but advises caution, suggesting that a pullback below 1.1750 would present a more attractive entry point for long positions.
De-dollarisation Narrative: Both firms highlight the ongoing de-dollarisation narrative as a significant factor influencing the EUR/USD dynamics, particularly in the first half of the year.
New Zealand Dollar Declines Broadly as RBNZ Fails to Meet Hawkish Expectations
USD Overview: The US dollar is trading sideways following a strong NFP report and soft CPI data, with market expectations for 60 bps of rate cuts by year-end; significant data releases are anticipated this week, including US Flash PMIs and Q4 GDP.
NZD Reaction: The NZD fell after the RBNZ maintained the OCR at 2.25%, disappointing hawkish expectations and focusing on economic weaknesses rather than inflation concerns.
NZDUSD Technical Analysis: On the daily chart, NZDUSD is consolidating near highs, while the 4-hour chart shows a key support level at 0.5995, with potential for buyers to target 0.61 or sellers to aim for a drop to 0.5927.
Upcoming Economic Events: Key upcoming events include the FOMC Meeting Minutes, US Jobless Claims, and significant data releases on Friday, including US Q4 GDP and the PCE price index.
