USD weekly forecast

The Dollar started the week weakening against its counterparts due to a sparse data calendar, leaving the currency susceptible to profit-taking following its rally at the end of the previous week.

Tuesday was quiet for the US Dollar, with some hawkish comments from Federal Reserve policymaker Michelle Bowman the only notable talking point which bolstered the USD. Bowman indicated that she was open to raising interest rates again if progress on inflation were to 'stall or even reverse course'.

Wednesday continued with an absence of significant data, the safe-haven US Dollar was strengthened by a cautious market sentiment.

On Thursday, the Dollar weakened against other currencies despite the release of domestic data. While US durable goods orders exceeded expectations in May, suggesting stronger demand, the latest initial jobless claims lingered near a ten-month high, which tempered the currency's performance.

The US Dollar ended the week struggling to attract support after the Fed's preferred inflation measure, the core PCE price index, eased from 2.8% to 2.6%.

Looking ahead this week for the US Dollar, the upcoming US ISM manufacturing PMI is anticipated to stay in contraction territory but show an uptick in sector activity, potentially providing support for the USD at the beginning of the week.

On Wednesday, the expected continuation of the US ISM services PMI in the expansion zone could provide support for the US Dollar.

On Wednesday evening, the release of the Fed's latest meeting minutes could inject volatility into the Dollar, especially if the forward guidance is perceived as dovish.

Looking towards the end of the week, Friday's release of the latest US jobs data is expected to show a decline, likely resulting in USD exchange rates ending the week on a weaker note.

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