The US dollar continues to receive significant support due to the program speech by the new head of the Federal Reserve, Jerome Powell.
Markets continue to turn slowly but surely towards the direction of realizing that the Fed will not go for the financial markets, as J. Powell clearly said on Tuesday that the recent market volatility will not cause him any issues. On the other hand, the weak hopes of some market players state that it will reveal warnings that have not been justified. The new leadership of the US Central Bank showed itself as persistent and being aware what the professional will do.
Powell's confident statement at the parliamentary hearings in Congress this Tuesday about the regulator to continue to follow the process of raising interest rates may even intensify on the wave of activating inflationary pressures, positive dynamics in the labor market and strong wage growth over the past eight years. Previously, it seems that it has become sobering markets and returning them to the sinful land with the understanding that the "sweet" times of unlimited and cheap liquidity are a thing of the past.
Today, the dollar can get support if the published figures of inflationary components show that the income values and expenditure of Americans, as well as the data of the basic index of expenditure on personal consumption (RFE), will present positive dynamics, then it will undoubtedly favorably affect the US dollar rate.
In accordance with the presented forecast, the annualized basis of basic index expenditures on personal consumption should maintain the previous growth rate of 1.5%. The monthly value of the indicator will grow by 0.3% in January compared to the previous value of 0.2%. At the same time, the data on income and expenditures of US consumers for January should gain 0.2% compared to December's 0.4%.
In assessing the general positive sentiments of market participants against the dollar, it can be assumed that even if the figures for the above indicators do not show a strong positive dynamics, it will still be considered as positive and may provide additional support to the dollar.
Forecast of the day:
The EUR/USD currency pair is trading below the 1.2225 level. It is pressured by the strengthening of the US dollar's position after the speech of J. Powell in the US Congress this Tuesday. From a technical point of view, the pair has formed the reversal pattern "double top", which has all chances to be realized down to 1.2100 and even to 1.2065 if the price is maintained below 1.2260.
The GBP/USD pair is trading below the 1.3785 level. The positive data on economic statistics from the US may exert pressure on it after a slight recovery and the price may drop to 1.3665.
* The presented market analysis is informative and does not constitute a guide to the transaction.
