Dollar Sliding on Monday
The US Dollar is starting the week on a softer footing following the surprise credit rating downgrade from Moody’s on Friday. The credit agency slashed the rating on US sovereign debt from AAA to AAB citing concerns around the heavily inflated US national debt level (currently around $36 trillion). While the news isn’t critical for USD, it does feed into current uncertainty around the path of the US Dollar. The greenback faltered last week as US/China trade optimism faded following news of the 90-day tariff reduction deal. Unless the market gets further goods news very quickly, USD looks vulnerable to a drift lower again.
US Data & Fed Easing Expectations
With US inflation seen cooling further last month and other key readings surprising to the downside also (GDP, retail sales, consumer confidence), Fed rate-cut expectations are also creating headwinds for USD. The market recently pushed out its next expected Fed cut from June to September. However, over the last week, pricing for a July cut has started to creep higher. If this dynamic continues to develop and we see July rate-cut expectations rise further, this could keep USD pressured near-term. Looking ahead this week, traders will be watching for any incoming news on US/China trade talks as well as the latest round of US PMIs and weekly jobless claims on Thursday.
Technical Views
DXY
The rally has stalled for now into a test of the 101.91 level with price now testing support at the 100.38 level and the rising trend line off YTD lows. If this support area breaks, focus turns to 99.15 next and a continuation of the bear channel lower towards 97.90 thereafter.
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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.