While the Fed is trying to find a balance between taming inflation and easing fears about the banking sector, the US dollar consolidated at 102.6 on Friday. It recouped some of its early losses even despite the Fed’s hints at a pause in aggressive tightening.

After a sharp rise from yesterday's low of 101.9, the US dollar index resumed moderate bullish momentum. In the Asian session, it was moving within the range of 102.5-102.7.

The price corridor is very narrow and looks more like consolidation. If it settles above the 102.3 level it will indicate a strong bullish bias. If so, the US currency could climb to 102.9.

However, the main trend remains bearish. If the greenback declines below 101.5, bears are sure to take control. Its further trajectory will largely depend on fresh economic reports.

Japan unveiled economic data in the morning. The figures turned out to be positive. The employment rate increased. Machinery orders showed the strongest rise over the past 10 months. Japan's core consumer prices sharply declined from a 40-year high of 4.2% in January to a 5-month low of 3.1% in February.

This reading is close to the Bank of Japan's 2% inflation target. The Japanese regulator feels more relaxed now than most of the world's central banks. It seems that the 10-year ultra-loose monetary policy is bearing fruit.

However, the recent banking crisis in the US and Europe has increased the risks for the country's exports. It may also trigger a slowdown in economic growth in China, Japan's largest trading partner. Import prices keep rising due to a weak yen and inflation triggered by soaring energy costs.

Nevertheless, bulls are still in control. Ahead of US economic reports, the dollar/yen pair is consolidating in the range of 129.9-130.93. On Friday morning, the pair declined lower.

It continued its 3-day downtrend, trading at 103.3 in the Asian session. The price reached the support level of 130.5. After that, it tested the psychologically important level of 130.

The fiscal year ends in a week. Japanese companies usually convert their dollar profits into the yen. The latter looks strong today, confirming its status as a safe haven asset.

Therefore, buyers may try to push the pair below the key level. After breaking through 130, the yen may move even lower to the February lows of 129.3 and 128. If they succeed, the price could dive to the yearly low of 127.2.

Commodity currencies dipped on Friday. The Australian dollar broke through the support level of 0.6670 for the first time in three days and fell to 0.6665. It could end this week with bigger losses.

In the Asian session, the AUD/USD pair was trading in the bearish channel of 0.6660–0.6694. So, the Australian dollar has acted as a risk barometer. Besides, apart from concerns over the banking crisis and the Fed’s stance, the Aussie decreased due to weak data on the Composite PMI Index.

The Composite PMI in Australia decreased significantly. It fell to 48.7 in March. A reading below the forecasts and 50 signals a contraction. This is hardly surprising that traders opened short positions amid such downbeat data. This is why the Australian dollar dropped in the Asian session.
NZD/USD
The New Zealand dollar also dipped in the morning. It was trading at 0.6216. It is unable to rise due to a strong bearish trend. The Kiwi is likely to slide lower today. In the Asian session, it was fluctuating in the range of 0.6211- 0.6255.

00:00 Intro
00:23 The continuation of the crisis
01:30 US Fed
02:40 USDX
03:49 JAPAN’S CORE CONSUMER INFLATION
05:01 USD/JPY
06:14 AUD/USD
06:40 MARKIT AUSTRALIA COMPOSITE PMI
07:18 NZD/USD


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