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Central bank events in Europe gave the dollar some support on Thursday, says Francesco Pisol, foreign exchange market analyst at ING.
The DXY may trade near 106.00
“The surprise rate cut by the Swiss National Bank and the dovish stance by the Bank of England reinforced the idea that Europe’s central banks are outpacing the Fed by a wide margin on interest rate cuts, which is a positive development for the dollar. The hawkish review of Norges Bank’s guidance has gone into effect. The other direction.
“Further easing in US inflation and/or activity data is now needed to close the interest rate gap between… Nourish it and other central banks, eventually fueling a new downward trend for the dollar. The next higher-level data for markets is the May Personal Consumption Expenditures report on June 28, but some indicators of activity before that could guide price expectations to a lesser extent.
“A comparison between European and US PMIs should drive some market action today, but we doubt there is enough to push the dollar significantly lower at this point, also taking into account ongoing political risks in the EU. The DXY index trades near 106.0 instead of 105.0 in the next few days.
