The US dollar has been in a consolidation mode in July, but this pattern may change as couple of important reports is scheduled for this week.
Perhaps the most important event in the near future will be the monetary policy meeting of the Federal Reserve. It will start tomorrow and the outcome will be announced the day after. While there is basically no change for an interest rate hike during the coming gathering, market participants will closely eye the statement released after the event. It may provide insights into the plans of US policy makers, particularly regarding the question whether the rate lift-off will happen in September or not. Whatever the Fed says, there will be lots of guesses regarding its future moves, and those speculations will likely shake the Forex market, resulting in volatile trading.
Of course, the important consideration for the Fed in the question whether to raise rates or not will be the pace of US economic growth. Thus, the advance figure for the second quarterâs gross domestic product will be a very important piece of economic data. It will not affect the Fedâs decision this month as the release of the report will occur after the policy meeting, but Fed members will most certainly consider the GDP figure during their next meeting. Economists believe that the report will show strong growth after the abysmal first quarter that had been affected by harsh winter. After all, this happened last year, and there is no reason to think that this year should be any different.
Analysts are reluctant to give predictions ahead of such important events. Not just it is hard to predict what exactly will happen, but also how the markets react to the news. Therefore, DailyFX issued a neutral forecast for the dollar. Forex Crunch was bullish on the dollar against other majors, but was neutral on EUR/USD and bearish on the greenback versus the Great Britain pound.
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