US Dollar: forecast for February 22-28
Expectations for a Fed’s rate hike on the March meeting declined sharply during the past couple of weeks. Minutes released last week confirmed that the Fed has no plans for a March hike. Course for a gradual policy tightening remain in place, but the market is no longer pricing in a hike in the first half of the year.
Despite all that, the US currency remains rather resilient. USD index spent the week above the 96 figure. You may see from the weekly chart that the index pulled from the trend line. It is trying to form a bullish reversal formation these days.
We believe the potential for more USD upside is high as the divergence in policies is coming back into the limelight. Anyway, the Fed looks more hawkish than the ECB or the Bank of Japan.
Economic calendar for the new week does not include any market turning events, but you should pay special attention to core durable goods data on Thursday and the second GDP estimate on Friday. According to the advance reading, the US economy rose by 0.7% in Q4.