The US dollar, which has been falling continuously, started a rebound on Wednesday, which seems to suggest that the market may turn around. Is it a real reversal or a fake rebound? Focus on the minutes of the Fed meeting at 2:00 (GMT+8) on Thursday and the PCE price index at 20:30 on Friday, which is expected to guide the dollar trend next week.
Investors debate whether the greenback has peaked since the dollar index fell from 105.
In addition to the suppression of technical trends, Fed officials mentioned that the possibility of raising interest rates by 25 basis points in September has become a major negative. The market believes that the Fed may turn from eagle to dove after inflation declines; at the same time, the number of weekly unemployment claims in the United States has reached a new high, and investors are also worried about the Fed Excessive interest rate hikes will impact the economy, and the theory of economic recession reappears. Investors also bought the euro on dips based on comments from ECB officials, as the European Central Bank is likely to start raising interest rates in the second half of the year.
As the saying goes, drinking cold water at an untimely time is jamming your teeth, and the dollar unexpectedly and unsurprisingly started a large-scale correction.
On February 24, Russia launched a special military operation against Ukraine. The US dollar broke through 96 in response, which was regarded as the starting point of the rising wave. After reaching the 105 level, the correction range was about 61.8% of 96-105, suggesting that the US dollar was still in a strong range. Turning up, there is still the possibility of returning to or even breaking through 105. If it falls below the 101.50 line, it is likely to test the 100 mark, which may be unfavorable for the dollar bulls to regroup.
The US dollar has not yet formed a strong reversal signal, and it is not known whether the short-term rebound can continue. It is advisable to track the development of the situation, especially the events and data in the next two days, which may provide investors with clearer guidance.
At 2:00 (GMT+8) on Thursday, the Federal Reserve will release the minutes of the May FOMC meeting. The minutes will disclose the details of the discussions of Fed officials in the May meeting. Investors especially value the officials’ views on inflation and interest rate hikes, and may give The clues of the June meeting, which in turn triggered market volatility.
At 20:30 on Friday (GMT+8), the US April PCE price index is also a heavy data. As the Fed’s most preferred inflation indicator, PCE data will show more details of US inflation, and then guide the Fed’s monetary policy direction. Although the U.S. CPI, PPI and retail sales data in April did not hit highs, the decline was limited. It is uncertain whether U.S. inflation has peaked. If the PCE is strong, it is likely to overturn these data and reignite the Fed’s concerns about inflation. The data triggers market volatility. More likely.
All in all, the dollar reversal conditions are not enough, and both the minutes and PCE data may provide considerable momentum. How the market develops next week is largely influenced by events and data.
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