The USD Index will be the one chart to watch this week as the Federal Reserve Chairman Powell gives an update to monetary policies on Wednesday. What are the key levels to watch out for?
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USD Index Analysis
The USD Index could be volatile this week as we see multiple data sets this week including a speech from the Federal Reserve Chairman and NFP Reports. The Federal Reserve Chairman is expected to remain dovish by hinting that the Fed will slow down the pace of tightening in line with the recent data results. The US Inflation rate has fallen to 7.7% and the Core Inflation rate has fallen to 6.3% although this has been lower this year, but this will help the Fed in its decision to slow the pace of tightening.
The Non-Farm Payroll data is forecast to come in lower than previous which follows the trend of the year. Non-Farm Payrolls have been over 700k this year in February however this seems to have been a one off as the average has moved lower ever since with last month’s number coming in below 300k. Initial Jobless Claims continue to rise well above 240k this could show in the upcoming unemployment figures.
The zone between 106.00 and 105.00 is being defended by buyers at the moment in anticipation of the Fed Chairman’s Speech. A dovish tone could see the USD Index trade through the 105.00 handle and down towards the 103.50. A surprise hawkish tone could have the opposite effects for price and we could see a move back to the 108.00 handle.
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