Last week, financial markets were focused on two issues, the financial situation, the liquidity crisis of banks, and the Federal Reserve meeting to determine the interest rate. At the beginning of last week, the turmoil and concern about the situation of the banks caused the USD to weaken in related symbols. But after the fear lessened and big banks announced financial support to small banks, the dollar got more powerful. But at the end of the week, the European banks' crisis caused worry in the market, but the dollar had a dual behavior in this situation, on one hand, it was weakened due to the banking crisis, and on the other hand, it was in demand as an asset.
On Wednesday, the Federal Reserve announced that it had raised interest rates by 0.25% to a range of 5%. In its policy statement, the Fed changed its tone, saying instead of calling for "sustained increases" in rates, "some additional policy action may be appropriate." In addition, the economic forecasts' summary showed that the final rate forecast remained unchanged at 5.1%. The dot-plot chart and the cautious tone in the Federal Reserve's statement caused a sell-off in the USD, causing the dollar to weaken in related symbols.
During the press conference, FOMC Chairman Jerome Powell restated that they do not anticipate a rate cut in 2023, nor did he discuss a balance sheet reduction strategy. These comments seemed slightly harsh but did not help the dollar ease the selling pressure.
The next FOMC meeting will be in early May, and CME Group's FedWatch tool shows markets are pricing in a 60 percent chance the Fed will keep policy rates unchanged. Although the April jobs report and consumer price index (CPI) numbers will probably guide market expectations, a stronger release than this week's core PCE inflation forecast could restore the Fed's hawkish conditions.
Meanwhile, now that the shutdown period is over, investors will be paying close attention to comments from Fed officials. In addition, Friday's fear in the markets showed that investors are still looking for signs of stress in the banking sector.
But US data showed that private sector activity rose at an accelerating pace in early March, with the S&P Global Composite PMI rising to 53.3 from 50.1 in February. The dollar strengthened slightly on Friday after the release of these data.
In the coming week, the data from the United States, Europe, and England will be important in the economic calendar. However, the market is still paying more attention to the banking crisis issue. Considering the banking crisis news has decreased, the US dollar can have a temporary ascendant. On the other hand, the crisis of European banks' stocks falling is at the top of the news.
The CB consumer confidence index (March) (Prev: 102.9 | Fore: 101.0) will be published on Tuesday at 02 PM UTC. If it publishes better than the forecasts, it can cause the US dollar to strengthen temporarily.
On Thursday at 12:30 pm, the Final GDP q/q (Prev: 3.2% | Fore: 2.7%) will be published. Since this data is a revision, it is far from affecting the market unless it releases with a big difference compared to the forecasts.
At the same time, the US Unemployment Claims index (Prev: 191K | Fore: 196K) will publish.
The Core PCE Price Index m/m (February) (Prev: 0.6% | Fore: 0.4%) will publish on Friday. If published with a decline according to expectations, it can cause the dollar value to decrease in related symbols because it increases the probability that the interest rate will remain constant in the next Federal Reserve meeting.
On Tuesday at 01 pm, ECB President Lagarde will give a speech. This speech will be significant for the bank's policy to control the banking crisis.
On Thursday at 12 pm, the German inflation report, CPI y/y (Prev: 8.7% | Fore: 7.3%), and German Prelim CPI m/m (March) (Prev: 0.8% | Fore: 0.7%) will be released.
On Friday at 09 am, the European region inflation report, CPI y/y (March) (Prev: 8.7% | Fore: 7.1%), and CPI m/m (March) ( Prev: 0.8% | Fore: 0.7%) will be released.
ECB President Lagarde will give a speech again on Friday at 03 pm. The points she says about inflation and inflation control measures will be significant.
At 08:45 am on Tuesday, BOE Gov Bailey will give a speech.
On Wednesday at 12:30 am, Australia's CPI y/y (March) (Prev: 7.4% | Fore: 7.1%) will publish.
The BOE's letter regarding inflation will release on Tuesday at noon.