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US Dollar Uptrend Under Pressure Ahead of Sales Data and FOMC Rate Decision

US Dollar Uptrend Under Pressure Ahead of Sales Data and FOMC Rate Decision

Nick Cawley, Strategist

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  • US Retail Sales data will steer the US dollar in the short-term.
  • US dollar basket chart flashes conflicting signals.

Q3 2019 USD Forecast and Top Trading Opportunities

For all economic and data releases see the DailyFX Economic Calendar

US Dollar Sells-off Ahead of Retail Sales Release

The greenback is under pressure with the US dollar basket down around 120 pips since hitting a 228-month high at the start of the month. In part the basket has been underpinned by weakness in the Euro and Sterling – which have both strengthened in the past 24-hours – while recent data has been mixed. Last week ISM manufacturing release was much stronger than expected while the US Labour Report (NFP) showed a slower rate of job creation but higher average hourly earnings. And yesterday’s inflation release – stronger than expected – adds to the current conundrum facing the Fed who are looking to cut interest rates further next week in the face of a strong jobs/wages market alongside a robust inflation backdrop.

Today’s advanced look at US Retail Sales (August) is expected to show a month-on-month downturn to 0.2% from a prior month’s 0.7%. While the US consumer has more money, and the jobs market remains tight, the ongoing US-China trade war may see consumers pare back investment decision until the political backdrop looks clearer.

US Retail Sales Data

US Dollar Uptrend Under Pressure Ahead of Sales Data and FOMC Rate Decision

Via TradingEconomics.Com

The recent sell-off in the US dollar has seen the greenback break below the 20-day moving average and touch the 50-day ma, adding to bearish momentum. The recent set of higher lows remain in place while the trend of higher highs has just been broken, although a retail sales beat may see this formation return.

Buy the Higher Low and Sell the Lower High

US Dollar Basket Daily Price Chart (January - September 13, 2019)

US Dollar Uptrend Under Pressure Ahead of Sales Data and FOMC Rate Decision

IG Client Sentiment data shows how retail traders are positioned in a wide array of financial markets and how daily and weekly changes can help form trading ideas.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on the US Dollar. You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

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

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