By Areena FxThe US Dollar Index (DXY) had a strong week, gaining nearly 0.9% and testing the 107.00 level as market sentiment shifted cautiously toward the safe-haven USD. The upcoming week will keep the focus on US-centric data, starting with the release of US Purchasing Managers Index (PMI) figures on Monday. However, the key event will be the Federal Reserve’s (Fed) final rate decision of 2024 on Wednesday. Markets widely expect a third consecutive 25 basis points (bps) rate cut, but recent upticks in US inflation data could start to challenge expectations for continued rate reductions heading into 2025. The week will conclude on Friday with an update to the US Core Personal Consumption Expenditures Price Index (PCEPI) inflation data for November.
EUR/USD: The Euro saw a mild recovery on Friday, staying near 1.0500, but remains below the 1.0600 level as Euro traders struggle to find reasons to push the pair higher following its recent drop below 1.0400. European Central Bank (ECB) President Christine Lagarde will make multiple appearances on Monday, though significant, market-moving statements are unlikely as she sticks to a consistent, calming narrative.
GBP/USD: The British Pound weakened this week, falling back toward the 1.2600 area after a failed technical recovery attempt. GBP bulls were unable to reclaim the key 200-day Exponential Moving Average (EMA) near 1.2820, and the pair is now hovering at lower levels. After a week with minimal UK economic data, key releases are set for the coming week, including UK PMI data on Monday, labor market figures on Tuesday, Consumer Price Index (CPI) inflation on Wednesday, and the Bank of England’s (BoE) rate decision on Thursday. The BoE is expected to hold rates steady with a 7-2 vote in favor of no change.
USD/JPY: The US Dollar rebounded against the Japanese Yen this week, rising above 152.00 and making its way toward the 154.00 level. A 0.7% gain on Friday capped a five-day winning streak for USD/JPY, which has gained over 2.5% during the week. Traders of the Japanese Yen will be looking ahead to Thursday’s BoJ rate decision, where the central bank is expected to maintain its dovish stance. Market participants will also be keenly watching the BoJ’s press conference for any hints regarding future policy direction.