Abstract: The US dollar index rose slightly this trading day, and the euro fell against the US dollar. As of press time, it temporarily reported 1.2170, a decrease of 0.16%.

On June 8th, the US dollar index rose slightly this trading day, and the euro fell against the US dollar. As of press time, it temporarily reported 1.2170, a decrease of 0.16%.

The dollar may still depreciate

The U.S. dollar fell slightly on Monday, the U.S. dollar index fell 0.17% to 89.98, and the U.S. dollar volatility indicator fell to a 15-month low. Most G-10 currencies fluctuate within a narrow range.

The weaker-than-expected US employment data released last Friday has prompted investors to rethink the prospect of the Fed's cuts. Because investors are betting that employment growth is not strong enough to intensify expectations of the Federal Reserve's monetary policy tightening.

The US dollar rebounded this trading day, temporarily reporting 90.15, an increase of 0.20%. The market is currently waiting for the US May inflation data released on Thursday, which will be an important economic indicator announced on the eve of the Fed’s policy meeting. At 20:30 Beijing time on Thursday, the United States will announce May Consumer Price Index (CPI) data. Authoritative media surveys show that the unadjusted consumer price index (CPI) in the United States in May is expected to increase at an annual rate of 4.7%, and the unadjusted core CPI in the United States in May will increase at an annual rate of 3.4%.

Thomas Flury, head of foreign exchange strategy at UBS Global Wealth Management, said that we believe that the US dollar has room for further depreciation in the coming months.

However, investors may remain cautious as the Fed’s interest rate meeting is approaching. Bipan Rai, head of North American foreign exchange strategy at the Capital Markets Department of Imperial Bank of Canada, pointed out that at present, the market seems to really want to short the U.S. dollar. For us, this shows that this is a pursuit. This trend is risky because this is a very crowded position and investors are still waiting for the Fed's meeting next week.

The key support of the euro against the dollar faces challenges

The euro rose yesterday, and the euro rose 0.2% against the dollar, after rising to its highest level since June 3. However, the dovish speeches of European Central Bank policy makers indicate that the central bank is not in a hurry to slow down the pace of debt purchases under the 1.85 trillion euros (2.24 trillion US dollars) pandemic emergency asset purchase plan (PEPP).

Due to the strengthening of the US dollar, the euro fell against the US dollar this trading day. For the euro short-term, we need to pay attention to the European Central Bank's interest rate decision to be announced on Thursday.

Another news that may give the euro a boost is that Russia intends to go further in "de-dollarization." According to RIA Novosti, Russia is preparing to introduce stimulus measures to transfer foreign exchange liquidity to the euro, and has made it clear that it may issue instructions to state-owned enterprises to switch to the euro.

At present, the euro against the US dollar is still above 1.2170, but the bulls are somewhat powerless. The Trade View analysis team pointed out that if the euro against the dollar wants to go higher, it needs to see the euro against the dollar stay above 1.2170. If this situation occurs, the euro against the dollar may rise to 1.2222. If this level is overcome, the euro against the dollar is expected to rebound further to 1.2353.