Last week (9/18-9/22), the US dollar index rose by 0.25%, marking its 10th consecutive weekly gain. Non-US currencies showed mixed performance, with the British pound falling by 1.2% and the New Zealand dollar rising by 1.1%.
【Source: MacroMicro；Date2023/9/18-2023/9/22】
【Source: MacroMicro；Date2023/1/1-2023/9/22】
Last week, the euro/dollar fell by 0.1%, marking its 10th consecutive weekly decline. The main reasons were the hawkish signals from the Federal Open Market Committee (FOMC) meeting and ongoing weakness in eurozone economic data.
During the September FOMC meeting, the Federal Reserve chose to hold steady but raised its interest rate expectations for this year and next on the dot plot, signaling a longer period of higher rates. Meanwhile, the Bank of England and the Swiss National Bank unexpectedly paused their rate hikes, leading to increased expectations of rate cuts by the European and British central banks next year.
Additionally, S&P IHS Markit data showed that the preliminary Eurozone PMI for September was 47.1, with manufacturing PMI at 43.4 and services PMI at 48.4. All three indicators remained in contraction territory, with manufacturing PMI staying below the threshold for 15 consecutive months, raising concerns about the Eurozone economy.
【Source：MacroMicro 】
Although US PMI data weakened slightly in September, the US economy still demonstrated greater resilience compared to the Eurozone. The German-US yield spread continued to widen, contributing to the euro's recent downward trend.
【Source：MacroMicro 】
Mitrade Analyst：
As we mentioned before, the divergence between the Eurozone's economic recession and strong growth in the United States continues to widen, exerting downward pressure on the Euro/USD. This week, the focus is on the US August PCE data and Eurozone September inflation data, as any changes in market expectations regarding central bank interest rate hikes in Europe and the US will have a crucial impact on the Euro/USD trend.
From a technical perspective, the Euro/USD has fallen below previous lows and is currently trading around 1.063. Considering that the RSI indicator is approaching oversold territory, there may be a certain rebound in the Euro/USD this week. However, until the Euro effectively breaks above the key resistance of the 21-day moving average near 1.0750, the Euro/USD remains in a downtrend.
【Source：TradingView】
On September 22nd, the Bank of Japan announced its latest monetary policy decision, keeping the key short-term interest rate unchanged at -0.1% and maintaining the target yield range for 10-year Japanese government bonds at +0.5%, which aligns with analysts' expectations.
However, both the central bank's statement and Governor Ueda Kazuo's comments showed no clear signs of a policy stance shift, disappointing market participants. Following the interest rate announcement, the USD/JPY pair briefly increased by over 40 pips, reaching above 148.
Although this meeting leaned towards a dovish outcome, the market believes that the Bank of Japan will naturally make hawkish adjustments as inflation continues to rise unexpectedly. Data from last Friday indicated that Japan's August overall CPI, core CPI (excluding fresh food), and core-core CPI (excluding fresh food and energy) grew year-on-year by 3.2%, 3.1%, and 4.3% respectively, slightly surpassing market expectations.
【Source：MacroMicro 】
Analysts point out that the USD/JPY level of 150 will serve as a trigger for Japan to take intervention measures.
Mitrade Analyst：
The expectation of market tightening has been shattered, leading to increased pressure for the depreciation of the Japanese yen. The Bank of Japan will likely have to intervene to prevent excessive devaluation of the yen exchange rate. Therefore, we believe that the USD/JPY will continue to experience a volatile trend this week, with a range of 147-150.
From a technical perspective, the USD/JPY has approached the previous high around 148.50 in early November last year. If it continues to break above, the next target would be at 149. However, the MACD indicator shows some consolidation signals, and we still believe that the USD/JPY may experience a temporary upward surge followed by a decline this week, with support levels around 147.
【Source：TradingView】
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