Talking Points:
- USDOLLAR Bullish RSI Momentum at Risk as 1Q GDP Contracts
- AUD/NZD Resistance in Focus Ahead of RBA Interest Rate Decision
- Oil Carves Triple Top- Downside Favored on Commodity Weakness
The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) continues to mark fresh monthly highs ahead of the preliminary 1Q GDP print, which is expected to show a 0.5 percent contraction in the growth rate, and a marked downward revision may undermine the short-term rebound in the greenback as it drags on interest rate expectations.
At the same time, the Core Personal Consumption Expenditure (PCE), the Fed’s preferred gauge for inflation, is expected to hold steady at an annualized 1.3 percent for the second straight quarter, and the ongoing slack in the real economy may encourage Chair Janet Yellen to retain a dovish outlook for monetary policy as the central bank remains in no rush to normalize monetary policy.
With that said, the fundamental outlook for the USDOLLAR may turn increasingly bearish going into the next Federal Open Market Committee (FOMC) meeting on June 18, and the reserve currency may face additional headwinds during the summer months as the central bank remains reluctant to move away from its zero-interest rate policy (ZIRP).
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Read More:
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USDOLLAR Daily
Chart – Created Using FXCM Marketscope 2.0
Remains at Risk for Lower High Should Bullish RSI Momentum Falter
Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
Interim Support: 10,354 to 10,375 (50.0 retracement)
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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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