Orlando Gutierrez
Learn 2 Trade
Fed´s dovishness helped DXY to break 96.3
Employment data supports bullish
Growing CPI is also bullish for the USD
Earlier this week we told you that with a break above 96.60 on the DXY we would be bullish on the USD. Well, we´re trading at 96.80 right now. Let´s start from the FOMC day and move forward. On FOMC day the interest rate remained unchanged but what was more important was a very dovish economic outlook, the Fed sees no rate hikes this year and only 1 in 2020. This made the DXY break with the 96.30 level and drop to the next bearish target at 95.80. This was short lived.
Of course that after such dovish news the dollar was going to flush but if we look at the bigger picture we might find that this is not the case. Strong job numbers have been coming out of the US consistently and I´m not talking about just non-farm payrolls. If you look at jobless claims and unemployment´s decrease and the average wage going up employment in the US seems strong. Not only that but if we take a look at the CPI numbers from the start of the year we´ve had a constant increase, combine this and employment data we can support the idea of a strong US Dollar.
Now on to technicals. After the bounce off 95.80 on FOMC day, the DXY broke above 96.30 to retest it and continue to move up breaking with 96.60. We see a retest of the 97.00 level which is also the 61.8% retracement of the last move down and a possible break and retest for a definite break above 97.70
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