Forex Today: US Dollar extends rebound ahead of PCE inflation data

Eren Sengezer FXStreet

Here is what you need to know on Friday, April 28:

The US Dollar (USD) continues to gather strength on the last trading day of April after having managed to record small gains against its major rivals on Thursday. First quarter Gross Domestic Product (GDP) data from the Eurozone and Germany will be watched closely by market participants ahead of April inflation figures from Germany. Later in the session, the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, will be featured in the US economic docket alongside the Employment Cost Index for the first quarter.

US Core PCE Preview: Why this is a lose-lose situation for the US Dollar.

The US Bureau of Economic Analysis (BEA) reported on Thursday that the US economy expanded at an annualized rate of 1.1% in the first quarter of 2023. This reading followed the 2.6% growth recorded in the last quarter of 2022 and came in worse than the market expectation for an expansion of 2%. Nevertheless, the USD held resilient against its rivals as the underlying details of the report showed healthy consumer activity and strong inflation components. With Wall Street's main indexes rallying after the opening bell, however, the US Dollar Index (DXY) erased a portion of its gains. Early Friday, the DXY has regained its traction and started to push higher toward 102.00.

During the Asian trading hours, the data from Japan showed that the Unemployment Rate climbed to 2.8% in March from 2.6% in February, compared to the market expectation of 2.5%. Additionally, Tokyo Consumer Price Index rose to 3.5% in April from 3.3%, surpassing analysts' estimate of 2.6% by a wide margin. Finally, the Bank of Japan (BoJ) announced that it left its policy settings unchanged as widely anticipated. The BoJ maintained the band around its 10-year JGB yield target at up and down 0.5% each while reiterating that it will take additional easing steps without hesitation as needed while striving for market stability. The BoJ's dovish tone provided a boost to USD/JPY and the pair was last seen rising more than 1% on the day near 135.50.

After having declined slightly below 1.1000 in the early American session on Thursday, EUR/USD staged a rebound and closed the day virtually unchanged. The pair continues to trade in a tight range below 1.1050 early Friday.

GBP/USD registered small gains on Thursday and continued to push higher toward 1.2500 in the Asian session before losing its traction. The pair was last seen trading flat on the day at around 1.2480.

For the third straight trading day on Thursday, Gold failed to reclaim $2,000. With the benchmark 10-year US Treasury bond yield stabilizing above 3.5% following the two-day rebound, XAU/USD stays on the back foot and trades below $1,990 early Friday.

Bitcoin benefited from the risk-positive atmosphere on Thursday and gained nearly 3%. BTC/USD trades in a tight range near $29,500 in the European morning. Ethereum rose 2% on Thursday and climbed above $1,900 before going into a consolidation phase slightly above that level early Friday.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD trims losses, back to 1.1830

EUR/USD manages to regain some composure, leaving behind part of the earlier losses and reclaim the 1.1830 region on Tuesday. In the meantime, the US Dollar’s upside impulse loses some momentum while investors remain cautious ahead of upcoming US data releases, including the FOMC Minutes.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

Crypto Today: Bitcoin, Ethereum, XRP upside looks limited amid deteriorating retail demand

The cryptocurrency market extends weakness with major coins including Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) trading in sideways price action at the time of writing on Tuesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.