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The US dollar held its ground today, as investors digested Federal Reserve Chair Jerome Powell’s recent comments on the ongoing rate hikes and their impact on the economy. This stability comes against the backdrop of Moody’s (NYSE:) decision to downgrade the US sovereign credit rating, citing political and governance concerns.

The market is closely watching this week’s economic indicators, with Tuesday’s Consumer Price Index (CPI) and retail sales figures taking center stage. Analysts are projecting a flat month-over-month headline CPI, which could see the year-over-year rate decrease to 3.3%. The core CPI, which excludes volatile food and energy prices, is expected to remain steady at 0.3% month-over-month or 4.1% year-over-year. Soft retail sales data might hint at tighter credit conditions impacting US consumers.

Later in the week, all eyes will be on San Francisco, where President Joe Biden is set to meet with Chinese President Xi Jinping during the Asia-Pacific Economic Cooperation (APEC) conference. The encounter comes amidst heightened geopolitical tensions, with many hoping for a dialogue that could ease relations between the two economic powerhouses.

As the week progresses, concerns about a potential US government shutdown loom, which could lead the dollar to revisit recent lows around 105.35/40. Investors remain cautious as these developments could significantly influence market sentiment and currency valuations in the coming days.

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