Weekly Trading Forecast: Dollar Prevails as FX Volatility Climbs
If indeed, the dollar is riding high on the difficulties of its most liquid counterparts; then its trend is fragile and at significant risk of stalling.
For now, pressure on the Euro is to remain although bulls will cling to the hope of a short covering rally given the overextended nature of current futures positioning.
A relatively empty economic calendar for both the UK and the US suggests that the Sterling might catch a break. Yet we’ll need to keep a close eye on official commentary ahead of the highly-anticipated Scottish referendum just two weeks away.
The Japanese Yen may rise if a round of supportive US economic data fuels stimulus withdrawal fears, sparking risk aversion and triggering carry trade liquidation.
The AUD’s resilience is under threat over the coming week, yet can another ‘shock’ jobs report and spike in market volatility leave a lasting dent on the currency.
The biggest risk surrounding the RBNZ interest rate decision will be a removal of the verbal intervention on the kiwi as the central bank sees a more sustainable recovery in New Zealand.
Looking ahead to next week, the US economic docket will be rather light with only Whole sale inventories, retail sales and the preliminary University of Michigan confidence surveys on tap.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.