Market Update: Dollar Strengthens, Euro Weakens Ahead of Key Data Releases
U.S. Dollar Resilience
The U.S. dollar showed strength in early European trading despite signs of economic weakness in the country. Traders are eagerly anticipating the release of key inflation data to gauge the Federal Reserve’s stance on interest rates.
At 04:00 ET (09:00 GMT), the Dollar Index, which measures the greenback against other major currencies, was up by 0.3% at 104.080.
Focus on U.S. Inflation
Recent data indicated a decline in U.S. orders and consumer confidence, but the dollar remained unfazed. All eyes are now on the Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation measure, set to be released on Thursday.
Economists are predicting a 0.4% increase for January, with a higher-than-expected reading potentially delaying any rate cuts by the Fed.
Analysts at ING believe that strong inflation figures could support the dollar’s value in the coming days.
Eurozone CPI in Focus
The euro edged lower against the dollar ahead of eurozone Consumer Price Index (CPI) reports. Economists are expecting a drop in the annual reading for February.
Although eurozone-specific factors are at play, the dollar’s dominance continues to influence the euro-dollar pair significantly.
ING suggests that the pair is likely to test the 1.0800 level in the near future.
Other Currency Movements
The British pound was impacted by a stronger dollar and rising grocery prices in the UK. Meanwhile, the New Zealand dollar slumped after the Reserve Bank of New Zealand’s decision to keep interest rates steady.
The Japanese yen weakened further, while the Chinese yuan remained steady as traders awaited key economic indicators for further market direction.
