The speech of Fed Chairman Jerome Powell and other top officials will be the main focus of dollar traders for the next few days.

The US dollar showed varied performance in early-week trading on October 16. USD/JPY continued to hover near the intervention threshold around the 149.70 range. However, the USD weakened against various other major currencies. AUD/USD and NZD/USD recorded the highest daily gains, followed by EUR/USD, which rose about 0.4% to around 1.0550 at the end of the European session.

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Market participants are now refocusing on considering the prospect of further Federal Reserve interest rate hikes. The speeches of Fed Chairman Jerome Powell and other top officials will be the main focus in the coming days. In addition, there will also be the release of US retail sales data and some other moderately impactful reports.

The ongoing conflict in the Middle East continues. Its impact on the global financial markets remains controlled, causing oil prices and safe havens to weaken again. However, all eyes are still on further developments.

If the conflict escalates and drives up world oil prices, the risk of inflation accelerating will rise. This situation could worsen market sentiment, trigger stock market declines, and pressure major central banks to reconsider their monetary policies.

"The market is going to be focused on whether we get a reacceleration in the economy early next year and whether that feeds into inflationary pressures," said Edward Moya, senior market analyst at OANDA in New York.

"The market is kind of getting confident that the Fed is done raising rates, but we'll see if geopolitical risks ... if the global energy crisis complicates what happens with inflation throughout the winter."

Fed Funds Futures indicate only a 31% chance of another Federal Reserve interest rate hike this year. Most market participants believe that the US inflation trend will continue to decline, meaning that the economy does not require further interest rate increases. The Fed can maintain the current interest rate within the range of 5.25% to 5.50% as long as there are no unexpected variables, such as a sharp increase in inflation due to excessive oil price hikes.