FX.co ★ 16.04.2024: Retail sales influence Fed forecasts and USD. What Powell will say

“The worst thing you can do is act urgently when urgency is not required.” This comment came today from Mary Daly, who heads the Federal Reserve Bank in San Francisco.

This is just one of the opinions of one of the 19 presidents of US central banks who determine policy moves of the US regulator. This viewpoint reflects the majority of these policymakers, including Federal Reserve Chairman Jerome Powell.

Amid such fundamentals, the US healthy economy stands out among other major economies, thus propelling the US dollar to new highs of the year. Let's add to this picture the growing anxiety in the Middle East and the flow of assets into the safe-haven US currency.

Meanwhile, the euro is trading under selling pressure due to dovish prospects of the ECB’s monetary policy. Besides, the pound sterling weakened in light of unemployment data in the UK.

Traders are braced for forex interventions by the Bank of Japan to save the yen, which has slumped to a critical level of 155 against the greenback.

It is no wonder that the US dollar is extending its advance against most major currencies for the fifth day in a row. As a result, its index has already recorded a 5-month high against the pound and euro today.

These major currencies are set to depreciate significantly in the coming weeks and months. So, the US dollar's reign on Forex is going to last indefinitely. Today, the US dollar index maintained its rise within an intraday corridor between 106.07 and 106.44.

When it comes to stock indexes, Wall Street was a little confused yesterday. Concerns over interest rates, earnings, and geopolitics sent the S&P 500 index back down by more than 1% on Monday to its lowest level in nearly two months. The index is again trading lower today with higher volatility. Now it is trading within an intraday corridor between 5,045 and 5,067.

Meanwhile, the US dollar is already heavily overbought. At the same time, the euro is heavily oversold. Such conditions should limit the potential for their movement on the chart. However, the single currency has already weakened to 1.0605, its lowest level since November 2.

Since its decline began with the ECB's signal last week of a rate cut in June, nothing has changed in this regard. On the contrary, the timeline for rate cuts in the US has moved even further on the calendar.

Therefore, the euro/dollar is set to remain in the bearish zone and even test the critical support of 1.06. The intraday corridor for today is seen between 1.0606 and 1.0656.

Oddly, the euro/dollar is trying to rise even despite the ultra-soft comments of ECB President Christine Lagarde. The policymaker said today that the regulator will cut interest rates in the near future unless there are any serious surprises.

In the meantime, crude oil is hanging around 90 dollars per barrel. The Brent price follows the pattern of jumping higher and then falling lower. Oil prices react primarily to all statements relating to the situation in the Middle East.

At first glance, geopolitical jitters are calming down. But Tel Aviv declared its readiness to respond to Iran. So, the risk of escalation has not gone away. In this context, oil investors simply are puzzled about what to do.

Now confusion keeps the market in balance. Volatility of futures for the benchmark Brent sends the price up and down by 1.5% from the level of 90.