USD: Dollar might have fallen far enough for time being – ING
10.03.2025, 09:47

USD: Dollar might have fallen far enough for time being – ING

FX markets are starting to settle down after a momentous week. While events in Europe were really the dominant factor, we would not have seen such big moves in EUR/USD were it not for US short-dated rates crumbling, ING's FX analyst Chris Turner notes.

DXY may return at 104.30/50

"Financial markets have priced the Fed terminal rate some 50bp lower in a little over a month. That may be enough for the time being barring some shock fall in US JOLTS job opening data (Tuesday) or big rise in the weekly initial jobless claims data (Thursday). Indeed, Federal Reserve Chair Jay Powell was quite sanguine about recent developments in a speech on Friday." 

"One takeaway was his comment that sentiment readings were not good predictors of consumption growth - suggesting it may be too early to predict the demise of the US consumer. This week also sees February CPI data on Wednesday, where the core rate is expected to remain sticky at 0.3% month-on-month. This all supports Powell's conclusion on Friday that the Fed does not need to be in a hurry to cut rates and could pour a little cold water on the market's 27bp pricing for a rate cut in June."

"Also please remember that the US has now switched to Daylight Savings Time, narrowing the time difference until the clocks go forward in Europe on 30 March. Away from US data this week, the focus will be on Ukraine peace talks in Saudi Arabia and the global trade war. DXY could probably do with some consolidation after a tumultuous week, though more selling interest may return at 104.30/50 as long as the European outlook continues to be positively re-assessed."

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