The US dollar moved to consolidation. In the Asian session, it was still trading in the narrow corridor of 101.7-102.0, trying to climb.

Perhaps the chart of the US dollar index gives a clearer idea of fundamental factors and market conditions. After all, there have been no significant changes in the greenback’s bearish trajectory for two weeks. The trading curve of the index signals either patience or cautiousness ahead of stronger drivers.

There are many reasons for its weakness. This is not about traders who priced in rate hikes a long time ago. The US dollar is losing steam against the euro, its main rival in the basket. Now, the euro is pushing the US currency down as the ECB is likely to hike the interest rate more aggressively than the Fed.

The US dollar fell to almost a 9-month low against the euro, trading on Friday slightly below the resistance level of 102. So, it approached 101.95. As a result, the greenback has logged a third week of a steady drop.

The US dollar also dipped versus the yen. The latter advanced largely amid Tokyo's core CPI data. Consumer prices jumped to 4.4% on an annual basis in January. Usually, inflation in Tokyo is a leading indicator of nationwide trends. It signals that inflation in February could be high.

Inflation has been gradually moving away from the Bank of Japan's 2% target for the eighth month in a row. It escalates pressure on the regulator. This is why it may abandon its ultra-loose stance. Although Haruhiko Kuroda keeps saying that the bank remains strongly committed to monetary easing, traders take his comments with a pinch of salt.

That was the main reason why the yen asserted strength on Friday morning. Besides, it has almost been trading with a bearish bias for the third month in a row.

The dollar/yen pair is recovering steadily after its 21-month bullish trend. During that period, the pair soared by more than 48%. In the Asian session, it dropped to 129.9. However, its increase was not as sharp as it was last week.

Back then, it slid to a 7-month low of 127.2. In the morning, the pair was fluctuating in the range of 129.5-130.3 with the yen constantly growing higher.

The AUD/USD pair added 2.2% this week. It notched the largest weekly gain since early November. In the Asian session, it was trading above the pivot level of 0.7000, consolidating near 0.7099. It made an attempt to approach its 8-month high.
The pair was also boosted by rising inflation in Australia and expectations of further tightening by the RBA. The reopening of China after a prolonged lockdown and money injections into the banking system also facilitated its growth.
Only the US GDP report limited its upside potential. It turned out to be mixed, indicating the likelihood of a hard and soft landing. Perhaps the Aussie will be unable to resume a long-term rally due to uncertainty. At least in the morning, it was moving in the downward range of 0.7095-0.7132.


00:00 Intro
00:20 US GDP data
01:31 USDX
02:34 USD/JPY
04:29 AUD/USD

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