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Federal Reserve Chair Jerome Powell reiterated that policymakers are in “no hurry” to adjust interest rates, emphasizing the need for greater clarity on economic conditions. However, his measured stance contrasts with growing market sentiment that the Fed may need to act sooner than expected. As a result, the dollar remains under pressure, weighed down by speculation of impending rate cuts.
Key Economic Events Ahead
Traders will closely monitor this week’s inflation data, which could determine the dollar’s near-term direction. The Consumer Price Index (CPI) report, set for release on March 12, is expected to show a slight moderation in price pressures.
Core CPI (m/m) is projected at 0.3%, easing from 0.4% previously, while headline CPI (m/m) is forecast to slow to 0.3% from 0.5%. On an annual basis, inflation is expected to dip to 2.9% from 3.0%. A softer-than-expected print could reinforce rate-cut expectations and weigh further on the dollar.
On March 13, attention will shift to the Producer Price Index (PPI) and weekly jobless claims. The Core PPI (m/m) is anticipated to remain steady at 0.3%, while initial jobless claims are forecast to rise slightly to 226K from 221K. Any downside surprises could add to dollar weakness.
Rounding out the week, the University of Michigan’s Consumer Sentiment Index will be released on March 14. Expectations point to a decline to 63.8 from 64.7, offering insights into consumer confidence and inflation expectations—key considerations for Fed policymakers.
If inflation data undershoots expectations, speculation on Fed rate cuts could intensify, keeping the dollar under pressure. Conversely, a stronger CPI reading might offer the greenback some relief by suggesting that the Fed could delay policy adjustments.
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