The US Dollar starts the week on a positive note as anticipation builds for the Federal Reserve’s initial move in 2024.
- The upward momentum of the US Dollar has persisted since late Friday.
- Traders prepare for a busy week, focusing on the Federal Reserve decision scheduled for Wednesday.
- There is a possibility that the US Dollar Index may decline from its current levels around the 200-day SMA.
In the European session on Monday, the US Dollar (USD) saw a slight increase, showcasing how traders consider all factors. Despite market expectations of a dovish stance from the US Federal Reserve (Fed) with anticipated rate cuts, the USD appears to be more attentive to the potential for Chairman Jerome Powell to signal a hawkish pause during Wednesday’s meeting.
In terms of economic indicators, significant developments precede the Fed meeting, notably the release of JOLTS Job Openings data for December on Tuesday. Wednesday holds the much-anticipated US Federal Reserve rate decision and Chairman Jerome Powell’s speech. Traders should reserve resources for other key events later in the week, including the Institute for Supply Management (ISM) Manufacturing PMI on Thursday and the publication of Nonfarm Payrolls and the final University of Michigan Sentiment Index on Friday, concluding the week.
Luis de Guindos, a member of the European Central Bank (ECB), stated that the situation in the Red Sea does not influence the ECB’s upcoming rate decisions, as reported by Bloomberg. This stands in contrast to ECB President Christine Lagarde’s remarks during the previous week’s rate decision meeting, where she mentioned that the Red Sea situation might contribute to inflationary pressures and needs close monitoring.
The 10-year US Treasury Note, with a current rate close to 4.12%, exhibits minor indications of breaking its correlation with the US Dollar Index (DXY). Despite observing some strength in the US Dollar on this Monday, the US bond market does not appear to be aligning closely with this trend.