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Forecasting the Coming Week: Markets remain focused on inflation

by FX BrokerNews

The US Dollar concluded its second consecutive week of gains, bolstered by a widespread surge in US yields across various maturities. This resurgence pushed the Dollar above the 104.00 level, adding to pressure on the overall risk sentiment. While both the Federal Reserve and the Bank of England maintained a dovish stance, the Bank of Japan surprised with a dovish hike, marking its first in 17 years.

The USD Index (DXY) continued its upward trajectory, surpassing the critical 104.00 barrier and crossing above the key 200-day Simple Moving Average (SMA). Looking ahead to the upcoming week, investors await the release of the Chicago Fed National Activity Index and New Home Sales data on March 25. Subsequently, attention turns to Durable Goods Orders, the FHFA House Price Index, and the influential Consumer Confidence report by the Conference Board on March 26. On March 28, market focus will be on the final Q4 GDP Growth Rate, complemented by Pending Home Sales, Initial Jobless Claims, and the final Michigan Consumer Sentiment print. March 29 will feature the release of the PCE data alongside Personal Income, Personal Spending, and Trade Balance figures.

EUR/USD faced accelerated downward pressure, testing the 1.0800 level towards the week’s end amidst robust Dollar demand. On March 26, Germany’s GfK Consumer Confidence will be released, followed by various sentiment indicators across the eurozone. Additionally, Germany’s Retail Sales and labor market report are expected on March 28.

Reflecting the prevailing bearish sentiment in the broader risk environment, GBP/USD experienced further downside, testing the 200-day SMA near 1.2590 by week’s end. In the UK, the final Q4 GDP Growth Rate is scheduled for March 28.

USD/JPY maintained its strong upward momentum, trading above the 151.00 level on Friday amid ongoing depreciation of the Japanese currency. The Bank of Japan will release its Minutes on March 25, followed by the Summary of Opinions and Foreign Bond Investment figures on March 28. Additionally, Housing Starts, Retail Sales, Industrial Production, and the Unemployment Rate are all due on March 29.

AUD/USD remained under pressure during the latter part of the week, revisiting the 0.6500 level. Key data releases include the RBA’s Consumer Inflation Expectations on March 25, Westpac’s Consumer Confidence Index on March 26, and Westpac’s Leading Index and Monthly CPI Indicator on March 27. Housing Credit and Retail Sales data are scheduled for March 28.

Anticipating Economic Perspectives: Voices on the Horizon

  • Fed’s Cook and Bostic speak on March 25 along with BoE’s Mann.
  • RBA’s Connolly is due to speak on March 26
  • FOMC Waller and BoJ Tamura speak on March 27.
  • Chief Powell speaks on March 29.

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