To recap on Friday, we saw a reduction in the initial jobless claims for the US following that the job market in the US remains strong.
The dollar's strength could continue in the near-term as US economic data support the case for the Federal Reserve to raise interest rates further, Investors now price in three more 25 basis points rate rises by the Fed in March, May, and June but the Fed could also revise its rate expectations higher at the next meeting in March and if that happens it could well put off investors from re-entering dollar short positions over the next few weeks.
USD last week had its fourth consecutive week of gains and is set to end a four-month losing streak, after the Fed's approach to inflation is on its way down and the core personal consumption expenditures price index, rose 0.6% higher than the 0.4% expected. That contributes to the US inflation rate is sitting at 4.7% which although a better figure for the US, its still more than twice the FED’S 2% target. On the note of inflation recent data including faster than expected retail sales and producer price inflation all reinforce the view that we have more work to do, to bring inflation down to the 2%.
EUR/USD pair traded 0.1% higher than its seven-week low due to the consumer price data which was out, and the Eurozone inflation is expected to ease up to 8.2% from 8.6% showing its on its way down but still way to high.
