Dollar Holds Steady Amid Fed Pause and PCE Anticipation
The US dollar traded cautiously lower, influenced by declining US Treasury yields and ongoing analysis of the Federal Reserve’s recent policy decision. Market participants are keenly focused on the upcoming release of the Personal Consumption Expenditures (PCE) Price Index, which is expected to provide further insight into the state of inflation.
Currency Movements
The US Dollar Index (DXY) remained range-bound below the 108.00 level, influenced by lower US yields. Alongside the PCE data, other key economic indicators, including Personal Income and Spending, the Chicago PMI, the Employment Cost Index, and a speech by Governor Bowman, will be closely watched.
The EUR/USD pair saw a slight increase, trading around the low 1.0400s, following the European Central Bank’s (ECB) anticipated 25 basis point rate cut. Market attention in the Eurozone will be on Germany’s flash inflation rate, along with jobs data and retail sales figures. The ECB’s Survey of Professional Forecasters (SPF) will also be released.
The GBP/USD pair extended its gains from the previous session, modestly rising and briefly approaching the 1.2480 area. Housing price data will be the primary economic release from the UK.
The USD/JPY pair experienced a significant decline, reaching a three-day low below the 154.00 level, continuing its retreat from the previous day. Japan’s economic calendar includes the unemployment rate, industrial production, retail sales, housing starts, construction orders, and the Tokyo inflation rate.
The AUD/USD pair recovered from three consecutive days of losses, returning to the 0.6250 area. Australia’s economic agenda features producer prices, housing credit data, and private sector credit results.
Commodities
West Texas Intermediate (WTI) crude oil prices continued their decline, approaching the $72.00 per barrel mark, a four-week low. Concerns surrounding potential US tariffs contributed to the downward pressure.
Gold prices resumed their upward trend, reaching a record high just below the key $2,800 per ounce level. Silver prices also rallied, surpassing the $31.00 per ounce mark for the first time since early December.
The US dollar’s performance remains tied to both domestic economic data, particularly the PCE release, and global economic developments. The confluence of Fed policy, European Central Bank actions, and other major economic releases will likely drive currency markets in the coming days.
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