Forex: The US dollar strengthens against a basket of currencies after the latest statistics from the US

The US dollar is strengthening against a basket of currencies today. Profits are also attributed to the Japanese yen, which, on the other hand, rose sharply against the dollar in the previous session due to suspicions of Japanese interventions. The US dollar is supported by the latest statistical data from the US.

Around 6:15 p.m. CET, the dollar index, which tracks the dollar’s performance against a basket of six leading world currencies, rose by 0.6 percent to 106.17 points. The euro weakened against the dollar by 0.4 percent to 1.0683 EUR/USD. The dollar against the Japanese yen strengthened by 0.8 percent to 157.53 USD/JPY. The euro gained 0.4 percent against the Japanese yen at 168.13 EUR/JPY.

The Japanese Yen rallied sharply against the dollar on Monday after touching a new 34-year low of $160.24/JPY. According to traders, the rise of the yen was caused by the interventions of the Japanese authorities to support the domestic currency. According to today’s data from the Bank of Japan, the country could spend approximately ¥5.5 trillion (CZK 822 billion) on Monday to support the currency.

The dollar was supported by statistics that showed US labor costs rose more than expected in the first quarter. This is likely to help delay the much-anticipated rate cut this year.

The Bank of Japan today left its May monthly bond purchase plan unchanged. Japanese bond investors are looking for signs of the timing of a tapering of buying that would drive higher, more attractive yields and support the yen.

A two-day meeting of the Monetary Committee of the US Central Bank (Fed) begins today in the United States. Rates are generally expected to remain unchanged. However, markets will be closely watching Fed chief Jerome Powell’s speech to see if he indicates the direction of the central bank’s policy development in light of the latest data on inflation and the labor market.

Markets are pushing back the expected date of the first US interest rate cut this year. The odds of a quarter percentage point rate cut in September are now slightly above 50 percent.

Eurozone inflation remained unchanged in April, as expected. A member of the European Central Bank, François Villeroy de Galhau, said that inflation data in France and the euro zone boost confidence that the ECB will be able to start cutting interest rates in early June, Reuters wrote.

Development of the USDX dollar index (1-hour chart – H1):

Development of the currency pair EUR/USD (1-hour chart – H1):

Development of the currency pair EUR/JPY (1-hour chart – H1):

Development of the currency pair USD/JPY (1-hour chart – H1):

Source: Reuters, ČTK, MT4

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