Trading Perspective on The US Dollar (May 27 – June 2)
Trading Perspective on The US Dollar (May 27 – June 2): Stand Aside
Fundamental Forecast for The USD: Bullish
Next week brings a series of important economic data releases out of the US. Most of them are expected to support the Fed’s rate hike path in 2018: Q1’18 Gross Domestic Product is forecasted to remain at 2.3%, Unemployment Rate is anticipated to remain at 3.9%, and ISM Manufacturing is calculated to advance to 58.1 from its previous announcement of 57.3. U.S. Core PCE Price Index YoY may slip slightly to 1.8% from the previous 1.9% in April, but it will unlikely do large impact on traders’ bullish expectations on the USD.
The rate hike probability in the next FOMC meeting on June 13 is currently at 90%.
Technical Forecast for The USD: Neutral
The US Dollar continued to have a positive week rising versus most of its counterparts. Looking at the DXY chart, we see that the 94.25 threshold has been reached with bullish momentum remaining relatively strong (evidenced via the steep degree of the bullish continuation started from May 14 despite that it had been less steep compared to the latest upward movement stemming from April 17). However, this is a difficult-to-beat obstacle, requiring us to be highly cautious when chasing upward moves as a breakout failure may happen. Our suggestion is standing aside.
A break above 94.25 with a vigorous bullish bias, followed by a weak pullback will likely have the obstacle at 95.11 submit soon. Alternatively, a bounce from 94.25 will demand a further observation. If a weak correction happens then, we can expect a break above 94.25 in the near future, and look for opportunities to enter long.
Fundamental Forecast for The USD: Bullish
Next week brings a series of important economic data releases out of the US. Most of them are expected to support the Fed’s rate hike path in 2018: Q1’18 Gross Domestic Product is forecasted to remain at 2.3%, Unemployment Rate is anticipated to remain at 3.9%, and ISM Manufacturing is calculated to advance to 58.1 from its previous announcement of 57.3. U.S. Core PCE Price Index YoY may slip slightly to 1.8% from the previous 1.9% in April, but it will unlikely do large impact on traders’ bullish expectations on the USD.
The rate hike probability in the next FOMC meeting on June 13 is currently at 90%.
Technical Forecast for The USD: Neutral
The US Dollar continued to have a positive week rising versus most of its counterparts. Looking at the DXY chart, we see that the 94.25 threshold has been reached with bullish momentum remaining relatively strong (evidenced via the steep degree of the bullish continuation started from May 14 despite that it had been less steep compared to the latest upward movement stemming from April 17). However, this is a difficult-to-beat obstacle, requiring us to be highly cautious when chasing upward moves as a breakout failure may happen. Our suggestion is standing aside.
A break above 94.25 with a vigorous bullish bias, followed by a weak pullback will likely have the obstacle at 95.11 submit soon. Alternatively, a bounce from 94.25 will demand a further observation. If a weak correction happens then, we can expect a break above 94.25 in the near future, and look for opportunities to enter long.
Comment:
A breakout failure occurred as expected. This Friday will have lots of high-profile releases, likely causing volatility - beware!
