Weekly currency forecast: US dollar to slide amid cooling US inflation? 

Currencies Direct June 24th 2024 - 2 minute read

The pound faced some selling pressure last week after the Bank of England (BoE) struck a relatively dovish tone in the wake of its latest interest rate decision. 

Looking ahead to this week’s session, an expected cooldown in US inflation could weigh heavily on the US dollar on Friday. 

Pound  

The pound fluctuated last week as the Bank of England revealed that its decision not to cut interest rates was ‘finely balanced’, fuelling bets on an August rate cut. Mixed British economic data on Friday added to GBP volatility. 

Turning to this week’s session, UK data is thin on the ground. Therefore, the looming election could drive most movement. Could any surprises in the last full week of campaigning impact the pound? 

Euro  

Weak Eurozone data weighed on the euro last week, with German economic sentiment and the Eurozone manufacturing and services PMIs all falling short of expectations. 

Although there are a few mid-tier data releases due out this week, EUR investors may instead focus on the political situation in France, as the country holds the first round of its legislative election this weekend. With the far-right expected to triumph, the euro could face selling pressure. 

US dollar  

The US dollar faced an uncertain start last week amid shifting risk appetite and weaker US retail sales. However, the ‘greenback’ firmed against its weaker rivals at the end of the session thanks to stronger-than-forecast PMI surveys. 

This week, the focus is firmly on the Federal Reserve’s preferred measure of inflation – the core PCE price index. Could cooling inflation boost Fed rate cut bets, thereby undermining the US dollar? 

Australian dollar  

The Australia dollar strengthened last week as the Reserve Bank of Australia (RBA) left the door open to another interest rate hike following its latest policy decision. 

Looking forward, an expected uptick in Australian inflation in May could boost the ‘Aussie’ this week by fuelling bets on hawkish action from the RBA. 

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