News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • Consolidation or bull flag? A bull flag is a continuation pattern that occurs as a brief pause in the trend following a strong price move higher. Learn how to better spot these formations here: https://t.co/yOEvLjKnct https://t.co/nD75SqMrxd
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 88.66%, while traders in France 40 are at opposite extremes with 79.92%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/0X721EyXki
  • Gold Prices at 3-Month High Amid USD Weakness after Big NFP Miss https://www.dailyfx.com/forex/market_alert/2021/05/10/Gold-Prices-at-3-Month-High-amid-USD-Weakness-after-Big-NFP-Miss.html https://t.co/ZlsBKlFOw6
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.23% 🇦🇺AUD: 0.02% 🇨🇦CAD: -0.02% 🇨🇭CHF: -0.08% 🇳🇿NZD: -0.09% 🇯🇵JPY: -0.26% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/pzMXnTquKf
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: France 40: 0.36% FTSE 100: 0.33% Germany 30: 0.28% Wall Street: 0.27% US 500: 0.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/d3nVIzPniI
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/ApsjkNfGMO
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.63% Silver: 0.61% Gold: 0.03% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/nO754swCBo
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.30% 🇦🇺AUD: 0.07% 🇨🇦CAD: 0.00% 🇪🇺EUR: -0.05% 🇨🇭CHF: -0.09% 🇯🇵JPY: -0.24% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/rdSUCcdssH
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 88.56%, while traders in France 40 are at opposite extremes with 80.47%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/85hvnrXx2Y
  • 🇦🇺 Retail Sales MoM Final (MAR) Actual: 1.3% Previous: -0.8% https://www.dailyfx.com/economic-calendar#2021-05-10
US Dollar Price Breakout Still Possible; US-China Trade War Latest

US Dollar Price Breakout Still Possible; US-China Trade War Latest

Christopher Vecchio, CFA, Senior Strategist

US Dollar Price Talking Points:

  • The DXY Index touched a fresh monthly high on Tuesday, drawing into focus a potential bullish breakout opportunity around the May FOMC minutes release midweek.
  • US-China trade war tensions remain, but beyond verbal jousting, no new measures appear on the horizon.
  • Retail traders are selling US Dollar strength, suggesting that the bullish breakout attempt may have legs.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides.

The turn through the middle of May has brought about a new wave of US Dollar strength, largely mirroring the rise in US Treasury yields in recent days. With the British Pound proving volatile around the latest Brexit headlines and the Euro proving weak in the run-up to the European parliamentary elections, The DXY Index was able to post a fresh monthly high on Tuesday, drawing into focus a potential bullish breakout opportunity around the May FOMC minutes release midweek.

US-China Trade War Latest

After surprise developments over the past few weeks, the day-to-day movement on the US-China trade war seems to have slowed considerably. But now that the Trump administration has drawn Huawei into the US-China trade war, it’s clear that we’re still in the process of further escalation, not de-escalation. That’s to say that neither country is ready to move past the impasse. For markets, indeed, US-China trade war tensions remain, but beyond verbal jousting, no new tariffs appear on the horizon.

As noted previously, market participants shoukd to keep on eye on USDCNH prices for the foreseeable future as a gauge for trade tensions: China has used devaluation as a tool to neutralize the impact of the tariffs. Accordingly, traders may see Chinese Yuan strength (USDCNH weakness) as a sign that the trade tensions are de-escalating; and that Chinese Yuan weakness (USDCNH strength) may be interpreted as a sign that the trade tensions are escalating.

Ahead of May FOMC Minutes, 2019 Rate Cut Odds Fall (Table 1)

fed rate expectations, usd rate expectations, federal reserve rate cut odds, fed rate cut odds, fed rate hike odds

During the May Fed meeting and press conference at the start of the month, Fed Chair Jerome Powell said that low inflation was “transitory” and not “persistent.At the time on May 1, market participants interpreted this as a sign that the likelihood of a 25-bps rate cut this year is lower than previously expected: odds of a cut by September had fallen to 26% and odds of a cut by December were 50%.

Now, ahead of the May FOMC minutes, Fed funds futures are pricing in a 42% chance of a 25-bps rate cut in September and a 70% chance of a cut by the end of 2019. But given that the May Fed meeting itself provoked markets to reduce expectations of a cut this year, we would expect the sentiment taken in the May FOMC minutes themselves to be more optimistic than what rates markets are currently pricing (which may serve to the US Dollar’s benefit).

US Inflation Expectations Have Dipped Alongside Oil Prices (Chart 1)

oil price, oil technical analysis, oil chart, us inflation expectations, us cpi expectations, us inflation forecast

Against a backdrop where the US Dollar has rallied over the past year (DXY Index is up 4.7% over the past 52-weeks), FX markets are a headwind for US inflationary pressures. With the oil prices moderating over the past few month, inflationary pressures have been limited. Crude oil prices fell by -5.3% between April 23 and May 21, down from 66.30 to 62.77. As a result, medium-term US inflation expectations, as measured by the 5y5y inflation swap forwards, are down by -9.3-bps from 2.299% to 2.205% over the past four-weeks. These developments may prove troublesome at the June Fed meeting, but not in the May FOMC minutes.

US Dollar Net-Long Futures Positioning Persists (Chart 2)

dxy price forecast, dxy technical analysis, dxy price chart, dxy chart, dxy price, usd price forecast, usd technical analysis, usd price chart, usd chart, usd price, usd positioning, usd futures

Looking at positioning, according to the CFTC’s COT for the week ended May 14, speculators decreased their net-long US Dollar positions to 26.7K contracts, down from the 28.2K net-long contracts held in the week prior. Net-long US Dollar positioning has barely wavered since the start of the year: traders held 32.4K net-long contracts on January 1; and positioning remains below its 2018 high set during the week ended November 13 at 40.5K net-long contracts.

DXY Index Technical Analysis: Daily Price Chart (June 2018 to May 2019) (Chart 3)

dxy price forecast, dxy technical analysis, dxy price chart, dxy chart, dxy price, usd price forecast, usd technical analysis, usd price chart, usd chart, usd price

It appears that the sideways range that the DXY Index carved out in the month of May is being tested to the upside. Price has already established a fresh monthly high today above 98.10, the bearish outside engulfing bar high from the April US NFP report release on May 3. Since the start of the month, we have not seen price close below 97.15, the low from May 1, keeping the sideways consolidation in check. A move through 98.10 increases the odds of a return back to the yearly high set on April 25 at 98.32 over the coming sessions.

Read more: Gold Price Breakout on Hold amid Return to Range; Gold Volatility Drops

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES