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DXY Serves Up News Watcher’s Delight With Politics & Tier 1 Data

DXY Serves Up News Watcher’s Delight With Politics & Tier 1 Data

Tyler Yell, CMT, Currency Strategist

Will The Dollar Continues Its 2017 Downtrend? Get A Free DFX Q2 Market Forecast HERE

Talking Points:

The last week of April could hit trader’s square between the eyes that are holding DXY exposure. This week brings the all-important Durable Goods (Thursday) as well as GDP (Friday) on the economic data front as well as congressional attention in the US on passing the budget, which tax reform developments.

Naturally, traders stay focused on what will spark USD strength going forward. Despite EUR shorts coming off aggressively after the first-round election and attention now geared toward the May 7 run-off, DXY may find strength yet. Will that strength last beyond 101 on DXY appears to be the main question. A key focus on whether the price can carry above resistance in a downtrend that we have seen for 2017 is what the Fed will do from here. A component that could see DXY strengthen is clarity on the Fed’s Balance Sheet Reduction efforts, which is expected to hit its stride in 2018.

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Risks for USD price action are likely skewed lower with the upcoming data that could show US weakness. On Friday, we saw demand for upside protection in Eurodollars rising sharply across upcoming expiries like July 2017 and September 2017. Upside demand in Eurodollars means that market perceptions of tightening by the Federal Reserve are weakening, which often leads to USD weakness.

The technical picture continues to favor downside until proven wrong. The April 10 high of for DXY at 101.34 would be the clearest sign of a Bullish Reversal, but given the price from Monday’s low is over 2.5% away, it’s likely better to watch the Ichimoku Cloud as Resistance. Therefore, a break and close above 100.55 would open up the argument for a sustained DXY recovery to claw back some its 2017 losses.

We’ll continue to keep an eye on insight from the options market as well as Eurodollar futures in response to upcoming tier-1 news releases as well as political developments to gauge the probability of trend continuation lower or a possible reversal higher. Should the price continue below 100.55, I favor a move to the confluence of bearish targets at 97.95/66.

Join Tyler in his Daily Closing Bell webinars at 3 pm ET to discuss this market.

DXY Gaps To 2017 Lows After The First Round of the French Election on April 23

Chart Created by Tyler Yell, CMT


Shorter-Term DXY Technical Levels: Monday, April 24, 2017

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for

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