Trader, analyst and instructor with a 6-year experience

USD: what to expect next week?

Kira Iukhtenko

The US Federal Reserve sees the economy recovering, but waits for clear signals to begin hiking interest rates. The labor market dynamics seems to be on track, while low inflation, expensive currency and external threats stall the tightening.

Last week the US Chair Janet Yellen sounded more dovish than hawkish when testifying in Congress on Tuesday. The wording “patient” in forward guidance means rates are to stay low for at least two meetings. What’s more, rates could be increased only after the inflation stabilizes.

However, we remain bullish in our USD forecasts: the Fed’s is still planning to raise rates and discusses the right timing. On Thursday the US released inflation figures. Markets focused on core CPI that returned into the positive territory. As a result, demand for the US dollar revived.

On the new week pay attention to the PMI indices on Monday and on Wednesday. On Friday the labor market data will come into the limelight. There is still a lot of uncertainty surrounding the US currency, but the market still has a chance to form a bullish candle for the 8th month in a row. 

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