Forex Today: US Dollar stabilizes ahead of producer inflation data, Powell speech

Eren Sengezer FXStreet

Here is what you need to know on Tuesday, May 14:

The action in foreign exchange markets remain quiet following Monday's subdued trading. The US Dollar (USD) Index continues to fluctuate in a tight channel above 105.00 as investors await producer inflation data for April and Federal Reserve Chairman Jerome Powell's speech. Earlier in the day, the European economic docket will feature ZEW Survey results for Germany and the Euro area.

The benchmark 10-year US Treasury bond yield ended the first trading day of the week flat and main equity indexes closed little changed. The Producer Price Index (PPI) is forecast to rise 0.3% on a monthly basis in April following the 0.2% increase recorded in March. In the early American session, Chairman Powell will appear at a moderated discussion with De Nederlandsche Bank (DNB) President Klaas Knot at the Foreign Bankers' Association's Annual General Meeting in Amsterdam.

US Dollar PRICE This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the British Pound.

Fed&#x27;s Chair Powell speech

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.13%	0.23%	-0.44%	-0.07%	-0.05%	-0.15%	-0.24%
EUR	-0.13%		0.15%	-0.56%	-0.17%	-0.15%	-0.26%	-0.36%
GBP	-0.23%	-0.15%		-0.63%	-0.33%	-0.30%	-0.41%	-0.51%
JPY	0.44%	0.56%	0.63%		0.39%	0.35%	0.34%	0.16%
CAD	0.07%	0.17%	0.33%	-0.39%		-0.01%	-0.07%	-0.10%
AUD	0.05%	0.15%	0.30%	-0.35%	0.00%		-0.01%	-0.21%
NZD	0.15%	0.26%	0.41%	-0.34%	0.07%	0.00%		-0.10%
CHF	0.24%	0.36%	0.51%	-0.16%	0.10%	0.21%	0.10%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

EUR/USD climbed above 1.0800 on Monday but erased a small portion of its daily gains in the American session to close below this level. Early Tuesday, the pair fluctuates in a narrow channel at around 1.0780.

USD/JPY rose 0.3% on Monday and continued to push higher toward 156.50 early Tuesday. Japanese Finance Minister Shunichi Suzuki repeated on Tuesday that it is important for currencies to move in a stable manner, reflecting fundamentals. He added that they will closely monitor the foreign exchange moves. Earlier in the day, the data from Japan showed that the PPI rose 0.9% on a yearly basis in April, matching the market expectation and March's increase.

Meanwhile, the International Monetary Fund (IMF) said that Japan's commitment to allowing the Japanese Yen (JPY) to move flexibly would let the Bank of Japan (BoJ) focus on achieving price stability and warned against the call by certain experts to use monetary policy to limit the currency's depreciation, as reported by Reuters.

The UK's Office for National Statistics reported on Tuesday that the ILO Unemployment Rate edged higher to 4.3% in the three months to March from 4.2% as expected. The Claimant Count Change rose 8.9K, while the Employment Change was down 177K in April. Additionally, Average Earnings Excluding Bonus rose 6% (YoY) in the three months to March, while Average Earnings Including Bonus were up 5.7% (YoY) in the same period. GBP/USD showed no immediate reaction to these data and was last seen moving up and down in a narrow band at around 1.2550.

Gold staged a downward correction and lost about 1% on Monday. XAU/USD edged higher early Tuesday but remains below $2,350.

Economic Indicator

Fed's Chair Powell speech

Jerome H. Powell took office as a member of the Board of Governors of the Federal Reserve System on May 25, 2012, to fill an unexpired term. On November 2, 2017, President Donald Trump nominated Powell to serve as the next Chairman of the Federal Reserve. Powell assumed office as Chair on February 5, 2018.

EUR/USD flirts with weekly lows near 1.1770

EUR/USD now comes under further selling pressure, breaking below the 1.1800 support to challenge the area of weekly throughs near 1.1770 on Thursday. The pair’s decline comes in response to marked gains in the US Dollar amid steady geopolitical tensions. Ealier in the day, the ECB’s Lagarde delivered cautious remarks, although the currency remained apathetic.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.