The economic calendar serves as a crucial tool for traders, offering insights into potential market movements. Recently, the dollar has seen gains against major currencies such as the euro and the pound. This surge in the dollar’s strength has been influenced by comments from Federal Reserve Governor Christopher Waller. Waller’s remarks, indicating that the Fed is not in a rush to cut rates, have shifted market expectations. The probability of a rate cut in June has dropped slightly, affecting the dollar’s momentum.

Key Points Affecting the Dollar:

• Fed’s Rate Decision: Waller’s comments have introduced new momentum into the market, bolstering the dollar’s strength.
  
• Japanese Yen Stability: The yen has maintained its position, hovering around 151.36 per dollar. Concerns arise about potential Japanese intervention if the currency weakens further, especially if it crosses the 152 marks against the dollar.
  
• Euro and Pound: Both currencies have weakened against the dollar, with the euro hitting a five-week low at $1.0782 and the pound down at $1.2614. This has led the dollar index to rise by 0.2% to 104.63, its highest since mid-February.

Upcoming Events to Watch:

• U.S. Core PCE Inflation Data: Due on Friday, this data could significantly impact the dollar and the yen. The market awaits this data with bated breath, with the potential for significant movement in the currency markets.
• Fed Chair Jerome Powell’s Appearance: His comments will be closely watched for any hints on future monetary policy.

Market Reactions and Potential Scenarios:

• Intervention Watch: Market participants are on high alert for a potential Japanese intervention if the yen crosses the 152 mark against the dollar. Takeshi Ishida, a currency strategist at Resona Holdings, stated, “Once dollar/yen touches 152, I think there will probably be a sharp move upward, and that’s when intervention could take place.”
  
• Currency Fluctuations: The Swiss franc and the Australian dollar have also experienced pressure due to various factors, including central bank actions and consumer data. The Swiss franc fell by 0.2% to 0.9057 francs, and the Australian dollar decreased by 0.6% to $0.6495, with consumer data from Australia showing a modest 0.3% increase in retail sales in February, missing forecasts.
  
• China’s Yuan: China’s central bank set the yuan fixing at the widest gap against Reuters’ estimate in nearly five months to prevent sharp declines in the currency. The onshore yuan was mostly flat at 7.2292 per dollar, while offshore it was at 7.265 per dollar, slightly weaker.

Conclusion:

The economic calendar serves as a guide for traders to navigate the complex interplay between economic events and currency values. With central bank decisions, key economic data releases, and potential market interventions on the horizon, traders must stay informed to make strategic decisions in the forex market.