The Dollar Slams Into Resistance, Weekly Forecast

The Buck Stops Here

The U.S. dollar made a stellar mover higher over the past few weeks but that move has come to an end. Trade hopes, U.S. economic dominance, and a supportive FOMC were not enough to break the DXY out of its trading range. The index is now showing resistance at the top of the range, near the $97.50 level, where is has been halted many times in the past. The weaker than expected labor data last week is one reason for the halt, the fact all major world currencies are weakening along with the global economy is another.

Dollar traders are going to have an event-filled week. The economic calendar is full and includes CPI, PPI, manufacturing, retail sales, and housing data. CPI and PPI are going to be the most important, inflation is what drives the FOMC to change rates. Inflation has been subsiding, weaker than expected reads could pull support from under the dollar in a hurry.

India Poised For Growth

The Indian Rupee has been gaining strength versus the dollar over the past few months and is set to test a major support line. The pair has been pressured lower by improvement in the state-run lending facilities and hopes a round of new elections will solve political issues. The USD/INR is indicated lower and likely to hit 69.50 versus the dollar at least. A move below that level would be bullish for the Rupee and could take the pair to 68.00 or 67.00

The Pound Regains Traction

The British pound has been on uncertain footing versus the dollar but may be regaining its traction. The pair is supported by hope the UK won’t let a hard-Brexit happen. The UK parliament is about to vote on the crucial May Brexit Deal, if they don’t pass it all bets are off. For now, support is at the 1.3000 level and looks strong, a move up to 1.3200 and 1.3300 is expected.

Yen Poised To Move Big

The Yen is poised to move big but which was is questionable. The USD/JPY has been trending higher over the past few months and looks like it could move higher again. It is testing support at the 30 day moving average where a bounce is very likely to form. The question is if the dollar can maintain its strength versus the yen or if it will succumb to global pressures and break support. A fall through the EMA would be bearish and could take the pair down to 110.00 or 108.00.