Dollar Pauses Near YTD Highs - NFPs On Watch
Dollar Muted for Now
The US Dollar is starting the week on a softer footing as the Dollar Index remains down from last week’s fresh YTD highs. Incoming headlines around developments in the Middle East remain a key driver for the greenback. News over the weekend of fresh US military strikes on Iran (and subsequent Iranian retaliation) sparked fears that the ceasefire might collapse. However, both sides have confirmed that they have now stood down and the ceasefire is being adhered to once again. With oil prices remaining lower, there is little reason for USD to rally for now and traders will await fresh catalysts.
US Data & Warsh Speech
Away from the Middle East, there is plenty to focus on this week with Fed chairman Walsh due to speak at the ECB’s Sintra panel on Wednesday. We’ll also have the latest US ISM data that day too followed by the headline US jobs report on Thursday ahead of the long weekend in the states. Given the uptick in hawkish Fed expectations, Thursday’s data will be make or break for the US Dollar near-term. If we see fresh strength in the labour market, this should endorse the recent hawkish shift, creating fresh demand for USD. However, fi we undershoot forecasts, this might suggest to traders that the recent build in rate hike expectations has become too aggressive, leading to a corrective move lower in USD.
Technical Views
DXY
For now, DXY remains stalled ahead of the 101.91 level, still within the upper half of the bull channel. While above the $100-mark, focus is on a fresh push higher with 103.20 the next target for bulls.
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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.