Dollar Weak on Monday
The US Dollar is starting the week in languid fashion with the DXY holding just above the YTD lows on Monday. Optimism over the US trade agenda has seen market focus turning back towards Fed easing expectations here. Recent US data weakness and dovish commentary from some Fed members (notably Waller and Bowman) has seen rate-cut pricing creeping higher.
Rate-Cut Pricing
The market is now fully pricing in a September cut with pricing for a cut in July up to around 25%. Looking ahead this week, traders will be watching incoming US labour market data on Thursday. The headline NFP print is expected to move lower again which, if confirmed, will keep USD anchored lower. Should we see a downside surprise in that data, July easing pricing will likely tick up putting fresh pressure on USD with DXY vulnerable to a downside break in this scenario.
US Trade & Middle East
Traders will also be monitoring US trade deal news and the situation in the Middle East. If any further US trade deals are announced and if the Israel-Iran ceasefire continues to hold, this should keep USD lower near-term, keeping the focus on Fed easing expectations. Should trade talks stumble, however, and if the ceasefire in the Middle East breaks down, this could fuel swift upside volatility in USD.
Technical Views
DXY
For now, the sell off in DXY has stalled into the retest of the 2021 highs around 96.89. However, while price holds below the 98 level and within the bear channel, focus is on a continuation lower with 94.85 sitting as the deeper bear target 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.