USD weekly forecast

As Monday's session commenced, the US Dollar declined, influenced by a growing appetite for risk, which diminished investor interest in the safe-haven currency. Additionally, a slight decrease in US Treasury Yields further weakened the 'greenback' throughout the latter part of the session.

On Tuesday, the USD continued its downward trend following a downward revision to the latest American producer price inflation figures, which led markets to anticipate broader inflationary easing. However, Federal Reserve Chair Jerome Powell struck a hawkish tone during an afternoon address, suggesting that US inflation might take longer than expected to reach the central bank’s 2% target rate. Consequently, the USD's losses were somewhat mitigated as markets scaled back their bets on a Fed interest rate cut ahead of the imminent US CPI release.

On Wednesday, both headline and core inflation eased as forecasted to 3.4% and 3.6%, respectively. The indication that inflation might be once again moving downward prompted the USD to hit a one-month low as markets increased their expectations of a Fed rate cut. This was exacerbated by a weak set of US retail data, indicating a slowdown in consumer activity in the US.

On Thursday, initial jobless claims fell less than anticipated to 222,000, though investors found some encouragement in the decline from the previous week's figures. Consequently, the USD managed to regain some of its recent losses in the latter part of the session.

As the week drew to a close, the US Dollar found additional support amidst a downbeat market sentiment, leveraging its safe-haven status.

Looking ahead, an influx of Fed speeches as the week begins could drive notable volatility for the USD. If policymakers maintain a hawkish tone, the Dollar  might rebound from its recent lows.

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