AUD/USD Pair Remains Under Strong Selling Pressure, The EUR/USD Pair Has Been Falling But Remains Above 1.08$
Aa
Share
The US dollar was on an upward trend against its major trading partners early Tuesday ahead of a busy schedule of data releases for markets.
The Fed is coming soon. The US central bank is expected to raise interest rates again to fight inflation. However, fears seem to be growing that the price of victory here may be a recession.
USD/JPY
The Japanese yen (JPY) continues to be supported by fresh speculation that high inflation could lead the Bank of Japan to adopt a more hawkish stance later this year. Also, the overall weaker tone around stock markets further reinforces the safe haven for the JPY. This, along with the underlying bearish sentiment around the US dollar, puts some downward pressure on USD/JPY.
The pair lost in the earlier trading hours but is trading above 130.10 again.
EUR/USD
The euro fell to USD 1.08 in the last session of January, but remains close to nine-month highs.
Investors await the ECB's monetary policy decision on Thursday, with the central bank expected to raise interest rates by 50 basis points, bringing borrowing costs to their highest level since 2008.
At the same time, data indicating an unexpected growth in the euro area in Q4 2022 by 0.1%, beating market forecasts of a decrease of 0.1%, and fresh CPI data for France and Spain, showing an increase in inflation in January, gave hope that The ECB will soon end its tightening cycle. On the negative side, retail sales in Germany fell by 5.3%MoM in December, much worse than expected.
The EUR/USD pair has been falling since the morning, even significantly in the European session, but remains above 1.08 and trades at 1.0850.
Read next: The Government Pension Fund Global Suffers Losses| FXMAG.COM
GBP/USD
The cable continued its decline in the early hours of the Asian session, falling below the 1.2350 level. GBP/USD saw a slight rebound to trade just above the 1.2350 level heading into the European open where the dollar bull returned pushing GBP/USD towards the 1.23000 handle. The GBP/USD pair remains under bearish pressure and is currently trading at 1.2321.
The rally on the GBP/USD pair appears to have lost momentum, however, given the key risk events, the move could be due to market participants repositioning ahead of the storm. With the focus on central banks, there is still a real possibility of a policy divergence between the FED and the BoE, which should benefit the cable in some way. The Fed is expected to raise interest rates by 25 basis points while the Bank of England by 50 basis points as it fights persistent inflation.
ING strategists said they expected BoE's decision to have a broadly neutral impact on the pound against the dollar.
AUD/USD
AUD/USD remains under strong selling pressure for the second day in a row on Tuesday and drops to more than a week low ahead of the North American session.
The Australian dollar fell towards $0.70, retreating further from recent highs after data showed the country's retail sales fell much more than expected in December as heightened inflationary pressures and higher interest rates dampened consumer spending.
Still, Australians are supported by expectations that the Reserve Bank of Australia will continue to fight inflation, expectations for a 25 basis point rate hike in February and China's swift reopening after Covid restrictions have boosted the global economic outlook.
Source: investing.com, finance.yahoo.com, dailyfx.com
