The focus of market participants this week has shifted from US economic data to statements made by Federal Reserve officials.

The Greenback is attempting to shake off the bearish pressure that persisted during the first half of last week. The US Dollar Index (DXY) was observed rebounding to around 105.70 at the beginning of the New York trading session on Tuesday, November 7th. On the other hand, various other major currencies are declining again.

dollar rebound

Market participants' focus this week has shifted from US economic data to statements by Federal Reserve officials. Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, initiated this shift with hawkish rhetoric in a speech on Monday. Kashkari stated that the US central bank likely has more work ahead to control inflation.

Federal Reserve Chair Jerome Powell is set to share his views on Wednesday and Thursday. Market participants will be watching to see if he maintains the "somewhat dovish" stance that the market seemed to perceive after the FOMC meeting last week.

The US Dollar is also gaining support from several international events. As predicted by some analysts yesterday, weak economic data from the Eurozone and China succeeded in slowing the selling pressure on the US dollar against several major currency pairs.

EUR/USD recorded a performance of approximately -0.4% in the range of 1.0660s as of the time of writing. The market is disappointed with a series of data releases from Germany indicating ongoing recession. German industrial production data even plunged to -1.4% in September, whereas the consensus had only expected -0.1%.

AUD/USD experienced the most significant drop, falling by more than 1% in a short span. Market sentiment deteriorated due to economic data releases from China and a weaker-than-expected announcement from the RBA.

The sharp fluctuations in the FX charts recently may also be related to repositioning in various currency pairs after reaching extreme levels. The developments in upcoming economic news will determine the next direction of the market, but technical corrections will also play a role. Traders should always be cautious in anticipating surprises.