empty
19.05.2023 11:29 AM
All eyes on Fed members and Jerome Powell's speech. EUR/USD and EUR/JPY set to rise

By the end of the week, the sentiment on global markets has noticeably improved. News about active negotiations between Joe Biden and Republican and Democrat leaders in Congress regarding the increase of the national debt ceiling infused some optimism into the market, leading to a notable rise in stock indices. Interestingly, this did affect the US currency.

Why is the US dollar staying afloat even amid increasing demand for risk assets?

Indeed, there was previously a certain correlation when the US dollar came under pressure on Forex. Usually, this happens amid high demand for corporate stocks and other assets like commodities. However, in the current situation, the dollar is receiving support as markets fear that the US Federal Reserve might increase the key interest rate at the meeting on June 14 instead of the expected pause. Here, statements from some Federal Reserve members play a significant role.

On Thursday, Federal Reserve Bank of St. Louis President J. Bullard told the Financial Times that he supported a rate hike as "insurance" against inflation. He added that inflation was declining more slowly than he had anticipated, meaning there is a risk of losing control over it. He expressed fears that, as was the case in the 1970s, it could start to turn upwards again. Dallas Fed President Lorie Logan agreed with her colleague, suggesting that a pause is currently inappropriate and much will depend on the incoming economic statistics data.

This is exactly the kind of sentiment among some Federal Reserve members that is supporting the dollar's rate due to the high probability of a rate hike at the June meeting.

In this regard, markets will especially wait for comments from other US regulator representatives: John C. Williams, Michelle W. Bowman, and, of course, Federal Reserve Chair Jerome Powell. Investors will be looking for clues about a potential interest rate increase next month.

Should we expect any signals from them?

The Fed representatives might give some comments, but Powell is likely to refrain from any statements as there is almost a month ahead of the Fed's meeting. Moreover, some important economic data, such as the unemployment rate, is still to be published. However, the market may react positively to the absence of negative signals today, remaining under the influence of the debt limit negotiations theme, and continuing the local rally on the stock markets. It is quite possible that USD can decline against the basket of major currencies to the level of 102.50.

This image is no longer relevant

This image is no longer relevant

EUR/USD

The pair is currently oversold. If ECB President Christine Lagarde confirms today that the regulator will continue to raise the rate, the pair may pass the level of 1.0800 and head for the upper target at 1.0900 amid an overall optimistic sentiment in the market.

EUR/JPY

The pair may also gain support amid Lagarde's speech regarding further rate hikes. If so, the price may break above the 149.35 level, aiming at the next target at 151.30.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Gold Rebounds as Fiscal Risks Resurface

Gold is swinging between extremes as spring draws to a close. The week ending May 16 was the worst for the precious metal due to optimism that, following a trade

Marek Petkovich 17:31 2025-05-23 UTC+2

AUD/JPY. Analysis and Forecast

Today, the AUD/JPY pair has started to attract buying interest, halting its pullback from the monthly high as demand for the Australian dollar emerges. Today's talks between U.S. Deputy Secretary

Irina Yanina 17:25 2025-05-23 UTC+2

USD/CAD. Analysis and Forecast

The pair is trending lower, dropping close to the key psychological level of 1.3800 amid broad-based U.S. dollar weakness. Traders have raised their expectations for Federal Reserve rate cuts following

Irina Yanina 16:43 2025-05-23 UTC+2

USD declares war on EUR

What's new is often just what's been forgotten. As spring draws to a close, the long-dismissed mantra "sell America" is making a comeback in markets. The phrase gained traction following

Marek Petkovich 14:59 2025-05-23 UTC+2

USD/JPY: what happens with yen?

The USD/JPY pair is experiencing heightened price turbulence. At the end of April, the pair sharply declined, hitting a 7-month low at 139.90. Then, last week, a northbound impulse pushed

Irina Manzenko 13:52 2025-05-23 UTC+2

Market Chaos to Continue (There is a likelihood of continued local declines in #USDX and gold prices)

Markets continue to act blindly amid the chaotic actions of Donald Trump, who is trying to pull the U.S. out of a deep, all-encompassing crisis like Baron Munchausen pulling himself

Pati Gani 10:19 2025-05-23 UTC+2

The Market Tucks Its Tail

A necessary project at the wrong time. The House of Representatives has approved Donald Trump's tax cut initiative. The President hopes it will help stimulate the economy and offset shortcomings

Marek Petkovich 09:29 2025-05-23 UTC+2

GBP/USD Overview – May 23: No Talks, but Hang in There

On Thursday, the GBP/USD currency pair traded relatively calmly, but like EUR/USD, it has been rising for two weeks. At first glance, one might wonder what reasons traders have

Paolo Greco 08:15 2025-05-23 UTC+2

EUR/USD Overview – May 23: The Rebellion Against the Dollar Continues

The EUR/USD currency pair traded relatively calmly on Thursday, yet it has risen significantly over the past two weeks. This movement can be interpreted in several ways. From a technical

Paolo Greco 08:15 2025-05-23 UTC+2

What to Pay Attention to on May 23? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Friday. Only two are noteworthy: the final estimate of Germany's Q1 GDP and April's UK retail sales data. The German GDP report

Paolo Greco 05:58 2025-05-23 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.