Big Week for USD
The Dollar is starting the week on a soft footing as traders look ahead to the March FOMC meeting midweek. Last week saw the DXY pivot away from heavy selling into consolidation mode. However, sentiment remains weak and the greenback is vulnerable to a fresh push lower this week on any dovish inputs. Ahead of the FOMC on Wednesday, traders will today be looking to the latest set of retail sales figures. Given concerns over a shift in consumer activity amidst recession fears, any downside surprise today is likely to be met with a firm move lower in USD as traders brace for a more dovish message from the Fed on Wednesday.
Retail Sales & FOMC
Looking at the forecasts for today’s data, headline MoM retail sales are seen at 0.6%, up from -0.9% prior with core seen at 0.3% up from -0.4% prior. Given the bullish forecasts, there is plenty of room for disappointment today if readings undershoot forecasts. If seen, this should keep USD pressured into the FOMC on Wednesday. Though no change in policy is expected from the Fed at this point, traders will be keen to receive the bank’s latest guidance, particularly with the shift we’ve seen in market pricing recently which is now starting to price in more than two .25% cuts this year, starting with the next cut in June. If the Fed is seen acknowledging risks from Trump’s trade war and the possibility of a US downturn, this should be firmly bearish for USD through the week.
Technical Views
DXY
The sell off in DXY has stalled for now into the 103.47 support. However, sentiment remains weak, reflected by bearish momentum studies readings and focus is on a further push lower while price holds below 104.59, putting focus on 101.91 as the deeper target for bears. Bulls need to get back above 104.59 to alleviate near-term risks.
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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.