US Dollar

It’s been a bearish year so far for the USD although the currency has generally shown bullish responses to FOMC meetings. The big question now is whether it can finally find some follow through or whether this is another rally that sellers will fade.

The US Dollar broke down to a fresh three-year low this week, and EUR/USD broke out. The big question now is whether the Fed lays the groundwork for rate cuts in the second-half of the year.

The US Dollar Index (DXY) is at 3+ year lows as continued yellow flags on inflation and the labor market could prompt the Fed to cut interest rates as soon as July.

USD bears have had an open door to press fresh lows after this morning’s CPI data came in below expectations. So far, they’ve been thwarted.

Tomorrow’s CPI release is big as it’s expected to be a change of pace, following three consecutive months of drawdown in YoY headline CPI figures.

After falling to 2.3% last month, base effects are likely to increase the year-over-year CPI inflation readings in each of the next two months.

USD bears have had an open door to run a break but, so far, they’ve continued to get shy on prints of fresh lows. Tomorrow’s NFP report represents an important driver for the matter.

US Dollar plunged into critical support at the yearly lows with the weekly range intact ahead of NFPs. Battle lines drawn on the DXY short-term technical charts.

The US Dollar is vulnerable as leading indicators point to near-expectation reading in this month’s NFP report, with headline job growth potentially coming in somewhere in the 115-150K range.

The US is expected to add 130K jobs in May, while the Unemployment Rate is seen holding steady at 4.2% during the same period.

The US Dollar remains near multi-year lows but whether USD bears can take over seems driven by macro dynamics in USD/JPY.