- NY Fed disavowed President Williams’ comments, USD and US rates bounce.
- Trade/ geopolitical worries, Fed easing bets to keep gains capped.
- US Michigan Consumer Sentiment data eyed amid risk-on.
The US dollar recovery gathered steam across the board in the European session, sending USD/JPY back towards 107.75, as the bulls continue to cheer the New York Fed’s clarification that President Williams’ comments were academic and not about immediate policy direction.
The US dollar collapsed across its main competitors in tandem with the Treasury yields in the US last session after the NY Fed President Williams’ comments remarks bolstered bets that the Fed would cut interest rates by 50 basis points, rather than 25 basis points.
However, the further upside looks elusive amid a lack of clarity on the US-China trade in-person trade meeting while escalating US-Iran geopolitical tensions also weigh on the risk sentiment that helps limit the downside in the safe-haven Yen. The Middle East tensions flared up again after the US Navy ship downed an Iranian drone in the Strait of Hormuz. However, the Iranian officials deny any such incident.
Further, looming July Fed rate cut also keep the dollar recovery in check, in turn loosening the bullish grip around the USD/JPY pair. The US dollar index stalled its bounce at 96.91, now trading around 96.80 region, almost unchanged on the day.
Markets now await the US Michigan Consumer Sentiment Index for the next direction on the prices. In the meantime, the pair will remain at mercy of the USD price-action and broader market sentiment.
Levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.