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- USD Index: A low close on the week will be a technical negative and point to a reversal – Scotiabank
USD Index: A low close on the week will be a technical negative and point to a reversal – Scotiabank
USD is mixed to slightly firmer on the day but soft weekly close remains a risk, economists at Scotiabank report.
The week ahead may add more pressure on the USD broadly
June price action looks to be gearing up for a reversal of some of the USD gains at least.
The week ahead may add more pressure on the USD broadly; headline US CPI is expected to moderate to the low 4% area, bringing a drop to a 3 handle on the radar in the near future (core prices will ease as well but remain elevated).
Given guidance from senior FOMC officials that a hike was unlikely this month and market pricing suggesting limited expectations for a hike, there is no incentive for policymakers to surprise investors. Skipping this month will contrast with policy hikes (and likely hawkish language) from the ECB and BoE in upcoming meetings.
A low close on the week will be a technical negative for broader measures of the USD’s performance (DXY, BBDXY) and point to a technical reversal in the May USD rebound and perhaps renewed pressure on DXY support around 101.
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