Dollar Testing Key Resistance
Focus on Fed-Speak
The US Dollar is stalled at a key resistance level ahead of a slew of incoming data and Fed-speak this week. Looking ahead today, Fed’s Goolsbee and Bowman are due to speak. Both Fed members have been on the hawkish side recently, speaking in favour of further tightening as a result of inflation risks remaining elevated. Last time around, Goolsbee said that further signs of inflation moderating were needed before making a decision in September. With annual CPI seen rising to 3.2% last month from 3% the prior month, it’s clear that inflation is softening though a further hike might still be needed to drive CPI back down to target quickly.
PMIs Due Wednesday
Tomorrow, focus will then turn to the next round of US PMIs. Both factory and non-factory readings are expected to cool somewhat. Should data come in sharply below forecasts, this will likely feed into the narrative that the Fed will remain on hold in September. On the other hand, if we see these readings beating forecasts, particularly if both are in growth territory, this might increase risks of a September hike.
Powell on Friday
Finally, Powell speaks on Friday and traders will be keen to hear if any clear signal is given for September. The latest FOMC minutes showed that policy makers were still concerned about inflationary risks, which were seen as likely requiring further hiking. If this message is reaffirmed this will likely lead USD higher on hawkish Fed expectations.
Technical Views
DXY
The rally in the index has seen price breaking above the bear channel highs. Price is currently stalled against the 103.48 level resistance level. This is a major pivot point for the market and a break higher here will be firmly bullish putting focus on a continuation to 104.95 next.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% and 70% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.