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DXY lower on Monday
The US Dollar remains weak across early European trading on Monday. The DXY is now down 2% from the June highs with USD finding sustained selling pressure recently amidst an uptick in Fed easing expectations. Recent jobs and inflation data have shown a weakening trend which has led traders to lift their forecasts for Fed easing through the remainder of the year. The market is now looking at a likely initial cut in September with a follow-up cut in November or December. This is a stark shift from a few weeks ago when September pricing had fallen sharply and traders were looking at just one cut later in the year.
Powell on Deck
Focus will now be on Fed’s Powell who speaks later today with traders preparing for a dovish shift on the back of last week’s CPI print. Inflation was seen falling back to 3%, a deeper-than-forecast drop. Traders are expecting Powell to echo the dovish sentiments shared by Goolsbee last week, with Fed’s Faly also due to speak later
July FOMC
Looking ahead, the July FOMC will be the next major catalyst at month end. With inflation now down for three consecutive months and jobs data trending lower, the Fed is likely to take a more dovish tone compared with the hawkish outlook offered last time around which should keep USD pressured lower near-term.
Technical Views
DXY
The sell-off in the DXY has seen the index breaking back below the bull channel lows and below the 104.97 level. Price is now testing support at the 104.04 level and with momentum studies bearish, risks of a deeper move are building. If we break lower here, focus will shift to 102.46 as the deeper bear target.
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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.