©Reuters
Investing.com – The US dollar was able to make some gains on Friday after US price data – a leading indicator of inflation – came in higher than expected, although the reading was lower than previously . As inflation continues to rise, the Fed is more likely to keep rates high.
The PPI reading registered a 0.3% month-on-month increase, when it was expected at 0.2%, and the year-over-year reading came in at 7.4%, versus a 7.2% forecast.
And the American closed at the level of 104,900, and the dollar had broken its uptrend after the Federal Reserve had hinted at the beginning of last November that the interest rate could rise less than expected for the month of December , but the Federal Reserve Chairman, Jerome Powell, has confirmed on every occasion that the final interest rate will be higher than previously expected.
The week ahead is of major significance for global markets in general, and the US dollar in particular, pending the Federal Reserve’s Open Market Committee decision on the US on December 14, and the Fed is expected to hike rates of interest by only 50 basis points, and not 75 as forecasts have indicated in the past.
The market is also awaiting a word from Chairman Powell on future interest rates and the Fed’s expectations for the US economy.
Before the latest Fed speech next Tuesday, December 13, a reading of the index, the most important measure of inflation, will be released.
The Fed entered the most violent tightening cycle in 40 years to control high inflation at the highest levels in the same period.
After Powell’s words, the dollar index recorded 3 consecutive weeks of loss, and on the weekly technical basis, the US dollar gives a sell signal, with the Fibonacci support and resistance levels as follows:
Support: 101.980, 103.208, 103.967
Resistance: 106.423, 107.182, 108.410
On a daily technical basis, the dollar is also giving sell signals, with support and resistance as follows:
Support: 104.222, 104.501, 104.673
Resistance: 105.231, 105.403, 105.682
The scenarios will be as follows: If consumer inflation data is higher than expected, the US dollar will rise further against the backdrop of the Fed’s continuing war on inflation. However, if expectations are met or fell short, the US dollar will be in a critical position and could be subject to further declines.
MUFG analysts pointed out that major currencies trading against the dollar are reducing their volatility to the normal long-term range, which indicates that markets see central banks reaching interest rates close to their finals in the first quarter of the year. 2023.
