The US dollar continued to see some volatility and could record some downward pressures as expectations shift toward a potentially softer monetary policy in the US.
Another interest rate hike is deemed less likely after last week’s economic data although traders could remain prudent.
However, the USD could find some temporary support after US financial institutions return to the market after Labor day. Traders could continue to monitor upcoming economic data release in the remaining period before the Federal Reserve’s meeting to adjust their expectations which could have some impact on the market.
The Euro could see some volatility in the coming days as traders continue to gauge the potential outcome of next week’s ECB meeting. The European currency could find some strength if expectations lean toward more rate hikes. However, concerns about economic conditions in the Euro area could weigh on the currency.
The market’s attention could also focus on Chinese economic data as PMI and import/exports figures to be released this week could generate some volatility. This could be particularly the case as China moves to boost its economy and its currency. In this regard, the strength the yuan recorded during the last two weeks could continue.
The Japanese yen could continue to see some resistance near its latest lows as concerns about a potential central bank intervention continue to linger. As a result the currency pair could extend its sideway trading trend.