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Dollar Softer on Monday
The US Dollar is looking a little softer through early trading on Monday as traders brace for plenty of volatility risk this week with both the May FOMC and April NFP due. The greenback has been a little softer over the last week, weighed on by weaker-than-forecast data (PMIs, advance GDP). However, this week’s headline events and data have the potential to drive a fresh rally higher in USD, creating volatility risk across all markets.
FOMC in Focus
Looking at the FOMC first, with June easing chances seen around 0%, traders will be keen to see what guidance the bank gives with regard to easing probabilities in the coming months. Currently, traders are pegging September as the likely time for the Fed to cut rates. However, if we see the Fed sticking to hawkish messaging this week, warning over the continued risks from inflation, September pricing might start to weaken, creating fresh support for USD near-term. With inflation still elevated and the jobs market remaining strong (as of last reading), there are clear hawkish risks seen into this meeting.
NFP Due on Friday
Following the FOMC, focus will then turn to the latest US jobs data on Friday. Recent data has continued to surprise to the upside, creating further headwinds for those calling for near-term Fed easing. If labour market data remains strong on Friday, this should amplify any post-FOMC USD rally we see.
Technical Views
DXY
The rally in DXY has stalled for now on the break above 104.95. However, with price still sitting atop the level, focus is on a fresh push higher and a test of the 107.04 level next. Should we see any dip below 104.95, however, 103.48 will be next support to note.
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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.