US Dollar rally should continue as recent data confirm robust growth – BBH

FXStreet Insights Team FXStreet

Analysts at BBH share their near-term outlook for the US Dollar Index (DXY).

Dollar rally should continue

"The dollar is trading higher in the wake of strong retail sales data. DXY traded at a new cycle near 106.437 earlier today but has since drifted lower to 106.266 currently. It remains on track to test the November 1 high near 107.113."

"The euro is trading flat near $1.0625 but the clean break below $1.0755 sets up a test of the November 1 low near $1.0515. Elsewhere, sterling is trading flat near $1.2445 after mixed U.K. labor market data. USD/JPY traded at a new cycle high near 154.60 as jawboning becomes stale."

"The dollar rally should continue as recent data confirm persistent inflation and robust growth in the U.S. The US data continue to come in mostly firmer and should keep upward pressure on US yields. We believe that while market easing expectations have adjusted violently after CPI, there is still room to go. When the market finally capitulates on the Fed, the dollar should gain further."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD faces next resistance near 1.1930

EUR/USD continues to build on its recovery in the latter part of Wednesday’s session, with upside momentum accelerating as the pair retargets the key 1.1900 barrier amid a further loss of traction in the US Dollar. Attention now shifts squarely to the US data docket, with labour market figures and the always influential CPI releases due on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.