The US Dollar has continued to weaken as expectations of a rate hike in 2023 evaporate but is held up so far by a key support level.
- Sentiment continues to move away from expectation of any more rate hikes by the US Federal Reserve in 2023, sending the US Dollar lower and stock markets higher. The US Dollar Index is now sitting on key support at 105.36 so we may see a technical reversal here in favour of the greenback, especially if the two relevant high-impact data releases sue today – FOMC Meeting Minutes and PPI data – support the case for a higher dollar, giving a potential long trade entry in the Dollar today.
- Yesterday FOMC member Kashkari made comments suggesting that US inflation is heading down, supporting the lower Dollar sentiment.
- The war in the middle east has remained confined so far to Israel and Gaza, despite incidents on the Israel-Lebanon border yesterday. However, the war may still widen, with Israel fully mobilized after calling up 360,000 reservists and receiving very firm backing from US President Biden yesterday. Crude Oil and Gold have ceased rising but are holding firm.
- In the Forex market, there has been little directional movement during the Asian session. Trend traders in the Forex market will be most interested in being long USD/JPY and short EUR/USD as these are the two major Dollar pairs which have historically tended to trend most reliably, and both have valid long-term trends. The Israeli Shekel is beginning to strengthen after almost reaching the big round number at 4.00 against the US Dollar. Since the Tokyo open, the New Zealand Dollar has been the weakest major currency, while the US Dollar and the British Pound have been the strongest.