Today, the financial markets will witness the release of several significant economic data, including the UK November CPI year-on-year, the Retail Price Index year-on-year, the Eurozone November Harmonized CPI year-on-year, the U.S. November Building Permits monthly preliminary rate, and New Home Starts annualized monthly rate. Additionally, in the early hours of the next day, the Federal Reserve will announce its latest interest rate decision, with investors paying close attention to its guidance on future monetary policy.
Strong Performance of the Dollar Index
Yesterday, the dollar index fluctuated upwards, closing slightly higher on the daily chart, currently trading near 106.90. The primary factors supporting the dollar's strength include short covering, a cooling of market expectations for Federal Reserve rate cuts in 2025, and better-than-expected U.S. retail sales data. These factors have collectively bolstered the dollar index's recent robust performance. Technically, the market is watching the resistance around 107.50 and support below 106.50.
Euro Under Pressure and Declining
The euro weakened against the dollar yesterday, closing slightly lower on the daily chart, currently trading near 1.0500. Profit-taking exerted some pressure on the euro's movement, and the strength of the dollar index was a significant factor in weighing down the euro. Additionally, weak economic data released in the Eurozone further dampened the euro's performance. Today, the market will focus on the resistance around 1.0600 and the support below 1.0400.
Pound Slightly Rising
The pound rose against the dollar yesterday, closing slightly higher on the daily chart, currently trading near 1.2710. The pound's rise was mainly driven by several favorable factors, including support from Federal Reserve rate cut expectations this week and UK economic data outperforming expectations. Moreover, the market widely anticipates that the Bank of England will maintain its policy unchanged this week, providing additional support for the pound. Technically, attention is on the resistance at 1.2800 and the support at 1.2600.
Focus Points
Aside from the aforementioned economic data, the Federal Reserve's upcoming interest rate decision is undoubtedly the most critical event. Investors will closely monitor the Fed's guidance on the prospect of rate cuts and its interpretation of economic data, which could have significant impacts on the dollar and other major currencies.
Overall, the dollar index continues to receive strong support, the euro is weakened by multiple pressures, while the pound remains stable due to favorable economic data and steady policy expectations. Investors should pay attention to the upcoming data and events to adjust their investment strategies accordingly.
