The US dollar weakened yesterday after weaker-than-expected readings of labor market data and orders. The 'Greenback' was ultimately not helped by comments from Loretta Mester, head of the Cleveland Fed. Although Merster indicated that the Fed is focused on weakening inflation, she indicated that tightening financing conditions should have an impact on the slowing US economy. Yesterday's gains in gold prices, coupled with a weakening dollar and Wall Street sentiment, show that markets are likely to pay a lot of attention to signals that could herald a possible 'hard landing'.
Fed Mester
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Open account Try demo Download mobile app Download mobile app- The Fed will not continue policy until inflation reaches 2%. It will have to raise interest rates above 5% and keep them there for some time.
- Inflation must fall further from current levels. Reductions in the Fed's balance sheet help the rate hike cycle.
- Tighter financial conditions should put constraints on the economy.
- We will be bold in balancing risks to minimize pain.
- The recent tightening of credit conditions by banks may be a result of the turmoil.
- I expect inflation to fall to 3.75% by the end of the year and 2% by 2025.
- Managing interest rate risk is critical for banks
- The Fed must effectively control the situation
- The effort by the Federal Reserve , which acted quickly to alleviate stress, seems to have stabilized the banks.
- The Fed is closely monitoring the banking system for signs of stress.
- The banking system is resilient, and tensions seem to have subsided since last month.
USDDIX index chart, D1 interval. We can see that sellers have regained the upper hand and are continuing to sell off the dollar, which is weakening against other currencies. A test of the psychological level of 100 points, which has proven to be a resistance level in the past, is not out of the question. Currently, it serves as a key support determined by previous price reactions. Looking at the RSI, the indicator has not yet reached the critical oversold level below 30 pts, which often precedes a contrarian bullish reaction. Source: xStation5
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