Talking Points:
- USDOLLAR Outlook Turns Increasingly Bearish Ahead of 1Q GDP, FOMC & NFP
- USD/JPY to Face Increased Volatility Amid Deviation in BoJ, Fed Policy Outlook
- GBP/USD to Eye Higher High as U.K. Recovery Picks Up
The string of failed attempts to close above the 10,470 pivot highlights a bearish outlook for the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar), and the reserve currency may track lower ahead of the Federal Open Market Committee (FOMC) meeting should the fundamental developments coming out of the world’s largest economy dampen the outlook for growth and inflation.
The U.S. 1Q GDP report may heighten the bearish sentiment surrounding the greenback as the growth rate cools to an annualized 1.1 percent from 2.6 percent during the last three-months of 2013, and the Fed may continue to highlight a dovish tone for monetary policy as Chair Janet Yellen remains reluctant to move away from the highly accommodative policy stance.
However, the market reaction to a dovish FOMC interest rate decision may be short-lived as Non-Farm Payrolls are projected to increase another 210K in April, and a marked pickup in job growth may help to limit the downside for the greenback as it puts increased pressure on the central bank to normalize monetary policy sooner rather than later.
Nevertheless, the technical outlook continues to favor the downside targets for the USDOLLAR as price & the Relative Strength Index (RSI) retain the bearish trend from earlier this year, and we will continue to look for opportunities to ‘sell bounces’ in the greenback until we see a material shift in the Fed’s policy outlook.
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Read More:
Price & Time: Stability Begets Instability
EUR/USD, GBP/USD Hover Near Breakout Levels – Patience Required
USDOLLAR Daily
Chart – Created Using FXCM Marketscope 2.0
String of Failed Attempts to Close Above 10,470 Highlights Lower High
Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
Interim Support: 10,406 (1.618 expansion)
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— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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USD/JPY at Risk for Key Break Amid Deviation in BoJ, Fed Policy
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