The US dollar remained within a narrow range against its major counterparts on Tuesday, as traders awaited the Federal Reserve’s monetary policy decision this week, seeking clues about the timing of a potential interest rate cut. On the other hand, data related to job vacancies from the US Bureau of Labor Statistics, scheduled for release later on Tuesday, will provide a precursor to the eagerly anticipated employment report due on Friday.
The dollar index stabilized during Asian hours, with the expectation that the Federal Reserve will keep interest rates unchanged. Markets will closely focus on the language used by Federal Reserve Chair Jerome Powell during Wednesday’s press conference and any hints regarding future interest rate cuts. Currently, markets anticipate a 46.6% probability of the Federal Reserve starting to reduce rates in March.
US job openings figures will kick off on Tuesday, setting the stage for the US employment report for January on Friday. These data will offer further insights into the state of the world’s largest economy.
The euro dipped against the dollar ahead of preliminary fourth-quarter GDP data for the Eurozone, while the British poundremained relatively unchanged against the dollar, holding its ground before the Bank of England’s monetary policy meeting this week.
The US dollar also edged lower against the yen, reaching 147.40, with expectations leaning towards potential shifts in Japanese monetary policy in the second quarter, especially when the Bank of Japan has additional wage data available. The dollar-yen exchange rate will likely be influenced more by the Federal Reserve than short-term expectations of policy changes by the Bank of Japan.
Government data released on Tuesday showed that Japan’s unemployment rate fell to 2.4% in December, slightly lower than economists’ average expectations of 2.5% in a Reuters survey.
The Australian dollar strengthened against the US dollar, supported by data revealing a 2.7% decline in local retail sales in December after a 1.6% rise in November, driven by Black Friday deals pushing spending forward.
Additionally, the New Zealand dollar rose, buoyed by comments from senior economists at the Reserve Bank of New Zealand suggesting that inflation remains excessively high.
In the cryptocurrency world, Bitcoin surged after touching its highest level since January 12.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
