The week was positive for the greenback. The US dollar index managed to set new highs near $93.50.
Weekly Forex Outlook: Mar. 19-23
The US dollar Index is trading sideways near 90.00. During the past week, the US currency was shaken by the turmoil in the Trump administration. The US President dismissed Secretary of State and decided to replace his national security adviser. Of course, traders now worry about the further direction of American policy.
The economic calendar for the days ahead looks interesting. The US the Federal Reserve meeting on Wednesday will surely take the central stage. This event can limit the negative pressure on the USD. The Fed’s press conference, however, will increase the market’s volatility, so be careful with your open trades. If the central bank signals less than 4 rate hikes this year, the USD may resume the decline.
There will be 2 more central bank meetings. The Reserve Bank of New Zealand will keep policy unchanged on Wednesday. The Bank of England may keep the door for a rate hike in May open. Positive or neutral scenarios for the pound are more likely than the negative one, although GBP bulls would need positive news about Brexit talks.
Other events to watch include Australian labor market figures and European PMIs on Thursday as well as Canadian inflation and retail sales together with US durable goods orders on Friday.
Japanese yen tends to perform well during the times of uncertainty, but USD/JPY will have support at 105.25/00.
At the same time, commodity currencies fell versus the USD. Support for NZD/USD is at 0.7180.
The EUR was weaker because of the cautious approach of the ECB. Note that the long-term uptrend is still in place until the pair trades above 1.22.
GBP/USD needs a break above 1.4000 to continue to 1.4070 and 1.4150.
This is Forex trading plan for Thursday, May 24…
It seems like the rally of the greenback has ended. On Monday, the US dollar index tested levels near $94, however, closed below $93.50.
Last week was highly positive for the US dollar, so, it managed to end the Friday’s trading above 93.50.