DXY Finds Support
Following a pullback from October highs last week, the US Dollar managed to find fresh demand with the DXY bouncing off the 98.24 level. The greenback is starting the week on a softer footing today, however, and traders are watching to see how sentiment develops through the day with a view to how the greenback is likely to move this week.
US/China Trade Updates
The two focus points this week will be US/China trade updates and the release of US CPI on Friday. On the trade front, a less hostile tone from Trump over the weekend ahead of scheduled meeting this week between US and Chinese officials is boosting optimism that a deal can be agreed ahead of the Nov 10th tariff deadline, or at the very least an extension of current terms. If talks go well this week, we’re likely to see USD recovering near-term. However, if talks stumble and tensions rise again, USD is likely to come under fresh pressure as safe havens gold and JPY surge higher again.
US Inflation on Watch
Looking ahead to Friday, focus will the shift to incoming US CPI. Amidst the absence of data in recent weeks as the US govt shutdown rolls on, this will be the biggest release so far and the most important for gauging Fed action. If data holds in line with forecasts or undershoots, this should keep Fed easing expectations well anchored, keeping USD pressured near-term.
Technical Views
DXY
The index has fallen back inside the bear channel but remains supported by the 98.24 level. While this level holds a return to upside is still viable with the October highs above 99.15 the initial hurdle for bulls. If we break lower, however, 96.63 is the key level to watch.
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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.