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USD Index Set For Lowest Close Since August, Slumps 1.75% On Week

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  • Softer-than-expected US inflation data and the associated adjustment in Fed cut pricing for 2024 weighed heavily on the greenback this week. This renewed pessimism prompted the USD index to fall 1.75% on the week, with the index looking to close the week at its worst levels since late August.
  • USD/JPY accelerated a move lower early Friday, amid a sharp pull lower for global bond yields. Fresh lows of 149.20 were printed, closely matching initial support at the 50-day EMA. While yield differentials remained the key driver in early trade, the late weakness in the front-end of TSY curve was unable to prompt a significant USDJPY reversal and the pair looks set to close back below 150.00.
  • EURUSD steadily moved higher after the early dip to 1.0825 this morning. The pair briefly traded above the 1.09 mark, a level not seen since late August. Tuesday’s strong rally reinforces this current bullish outlook. Price breached resistance at 1.0756, the Nov 6 high, to confirm a resumption of the short-term uptrend. This opens 1.0945 next, the Aug 30 high and a key resistance. Above here, 1.1005, the Aug 11 would be next on the radar.
  • Data focus next week for the single currency will be on flash PMIs in Europe (Germany, France and the Eurozone).
  • Elsewhere, the minutes to the November FOMC meeting out Tuesday will be scrutinized for further insight into how participants viewed the impact of tighter financial conditions on the outlook, particularly given that they were added to the Statement as a factor that was "likely to weigh on economic activity, hiring, and inflation". There will as always be attention paid to mentions of participants' criteria to hike further, or alternatively, to be satisfied that rates are sufficiently restrictive to return inflation to target.
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  • Softer-than-expected US inflation data and the associated adjustment in Fed cut pricing for 2024 weighed heavily on the greenback this week. This renewed pessimism prompted the USD index to fall 1.75% on the week, with the index looking to close the week at its worst levels since late August.
  • USD/JPY accelerated a move lower early Friday, amid a sharp pull lower for global bond yields. Fresh lows of 149.20 were printed, closely matching initial support at the 50-day EMA. While yield differentials remained the key driver in early trade, the late weakness in the front-end of TSY curve was unable to prompt a significant USDJPY reversal and the pair looks set to close back below 150.00.
  • EURUSD steadily moved higher after the early dip to 1.0825 this morning. The pair briefly traded above the 1.09 mark, a level not seen since late August. Tuesday’s strong rally reinforces this current bullish outlook. Price breached resistance at 1.0756, the Nov 6 high, to confirm a resumption of the short-term uptrend. This opens 1.0945 next, the Aug 30 high and a key resistance. Above here, 1.1005, the Aug 11 would be next on the radar.
  • Data focus next week for the single currency will be on flash PMIs in Europe (Germany, France and the Eurozone).
  • Elsewhere, the minutes to the November FOMC meeting out Tuesday will be scrutinized for further insight into how participants viewed the impact of tighter financial conditions on the outlook, particularly given that they were added to the Statement as a factor that was "likely to weigh on economic activity, hiring, and inflation". There will as always be attention paid to mentions of participants' criteria to hike further, or alternatively, to be satisfied that rates are sufficiently restrictive to return inflation to target.