The US dollar slows down its pace. The US dollar experienced a decline in Monday’s trading session, falling to the key zone of 106.00. This drop was influenced by an increase in risk appetite, making it difficult for the USD to gain strength. With no significant economic events taking place on Monday, investors turned their attention to the upcoming Federal Reserve interest rate and the NFP this week.
These events have the potential to further impact the price sentiment of the USD. Despite the strength of the US economy, it has not translated into crucial USD strength. Market data, such as the CME Group FedWatch tool, indicates a low likelihood of a 25 bps rate increase in December.
This limits the potential for substantial gains for the USD. It is widely anticipated that there will be a pause in interest rate changes at the upcoming meeting. However, investors will closely monitor the stance and outlook of Fed Chair Jerome Powell to gauge future decisions.
Fed Holds Key Decisions
The DXY Index experienced a decline of approximately 0.50% for a while. Investors who had profited from recent gains decided to take profits. Economic reports from last week are still being analyzed ahead of the Federal Reserve’s decision on Wednesday. Key data, such as the PCE Price Index, met expectations for September, with the Core PCE falling to 3.7% YoY.
Furthermore, preliminary estimates of GDP (Gross Domestic Product) for the third quarter exceeded expectations. There is also an annualized growth rate of 4.90%, surpassing the consensus of 4.20%. This increase in yields may limit the losses of the USD. As December approaches, the CME Group FedWatch Tool indicates low odds of an interest rate increase.
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