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US Dollar Quickly Claws Back to the Highs - Threatens Topside Break

US Dollar Quickly Claws Back to the Highs - Threatens Topside Break

James Stanley, Senior Strategist

US Dollar Talking Points:

It’s been a busy week across markets and from where we sit with a few hours to go before the end of the week, the big items is a return of bears into US equities.

Yesterday was particularly impactful as comments from FOMC Chair Jerome Powell were construed in a very hawkish manner, and this helped the US Dollar to jump while stocks took another bearish turn similar to what was showing around the Q2 open.

The US Dollar had posed a pullback earlier this week and those comments from Chair Powell and a handful of other Fed members have helped that to be a very short-term move. After setting a fresh high on Tuesday, stocks slid on Wednesday and that even held through Thursday morning. But the low in USD printed around the Euro open on Thursday morning and since, USD bulls have been back at work, forcing a series of breakouts and they may not be done yet as buyers are already bristling at the recently established yearly high.

The levels that I looked at on Wednesday morning were relevant to the move as a prior spot of support tuned into breakout resistance on Thursday, plotted at 100.27. That led into a breakout up to the next resistance of 100.57. And that was broken through overnight to lead to the next spot of resistance at that previously established yearly high of 101.02. And there’s still bullish breakout potential as the currency is showing a v-shaped reversal, which keeps the door open to further gains that could bring yet another fresh yearly high.

Of note, we’re fast approaching the blackout period for the FOMC and that rate decision in May is expected to be the first in recent memory in which the bank will hike rates by 50 basis points. So bullish potential exists from both fundamental and technical sides of the equation.

US Dollar Hourly Price Chart

usd hourly price chart

Chart prepared by James Stanley; USD, DXY on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

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