11.05.2022: USD stumbles; outlook for USDX, USD/JPY, AUD/USD
The main event scheduled for today is the publication of US inflation data. Analysts will make their predictions on how aggressively the Fed may continue to raise rates after studying today’s inflation figures. Previously Jerome Powell said that the regulator did not consider a 75 basis point rate hike in June. Other policymakers also stated that at the next two meetings in June and July, the Fed could hike the interest rate by 50 basis points. However, some market experts are certain that the central bank will be forced to undertake a 75 basis point rate increase in the near future. US Treasuries and the US dollar managed to extend their gains amid such forecasts. If inflation climbs higher, expectations of more aggressive rate hikes will only increase. If inflation slows down, it may calm down market participants. In turn, the Fed is likely to shift to a slower pace of monetary policy tightening. It means that the watchdog is highly likely to raise rates by 50 basis points in June and July. If so, the greenback could end its rally, consolidating at its current levels. Yesterday, trading on Wall Street was rather volatile. Stocks closed mixed, while the US dollar was trading steadily. The US dollar index, which measures the strength of the greenback against a basket of six major rivals, was holding firmly near a weekly high of 104. It maintains its winning streak amid expectations of new rate hikes. While other central banks give no clarity on rate increases, the Fed will definitely hike the rate by 50 or 75 basis points. For this reason, the US dollar is sure to retain its upward movement. However, today, in the Asian session, it lost momentum, consolidating within the range of 103.57–103.96. At the time of making the video, it was trading at 103.56. However, its trajectory is likely to become clearer after the release of the inflation report, that is in the US session. The US dollar has recently strengthened significantly as a safe-haven asset, dragging gold down for the third week in a row. Hence, the greenback is highly likely to grow in the next few months versus its rivals thanks to geopolitical, economic, and physiological factors. It seems that the US dollar has entered a consolidation phase. It was bullish for the yen. The US currency slowed its rally after a drop in the bond market. On Monday, the dollar/yen pair approached 131.35, a 20-year low. Yesterday, the pair was hesitant to pick up a trajectory, being slightly volatile. In today’s Asian session, the US dollar was falling against its counterparts, including the yen. At the time of writing this article, the pair dropped by 0.5%. As a result, it tumbled to 129.83 from 130.45. Today, the price is moving in between the resistance level of 130.49 and the support level of 129.82. Yet, analysts believe that a downtrend is likely to be short-lived. They suppose that the pair may stay below 131.00 in the coming weeks. The Aussie has hit the bottom this week. On Monday, the AUD/USD pair slid to 22-month lows due to a decrease in stock markets worldwide. Another bearish factor was falling oil prices. Oil tumbled below $100 per barrel for the first time in May. Prolonged lockdowns in China are also extremely negative for the dynamic of the Aussie. As of Tuesday, full or partial lockdowns have already been imposed in 41 Chinese cities. Nearly 289.8 million residents are now under strict lockdown. So, traders’ concerns that demand in China for commodities may sharply decline are not groundless. As a reminder, China is the largest importer of oil and a top trading partner of Australia. If China extends lockdowns, analysts predict a further drop in the Australian dollar. Currently, the Aussie is gaining momentum thanks to the consolidation of the US currency. At the time of making the video, the pair has already climbed to 0.7005. It is still recovering within the range of 0.6929–0.7007. 00:00 Intro 01:59 USDX 03:22 USD/JPY 04:27 AUD/USD https://www.instaforex.com FX Analytics - https://www.instaforex.com/forex_anal... Forex Calendar - https://www.instaforex.com/forex_cale... Forex TV from InstaForex - https://www.instaforex.com/instaforex_tv Forex charts - https://www.instaforex.com/charts Instant account opening - https://www.instaforex.com/fast_open_... Forex Trading Contests - https://www.instaforex.com/forex_cont... List of official InstaForex blogs: / instaforex / instaforex / instaforex #forex_news # asian_session #instaforex_tv
