Weekly USDOLLAR Chart
The USDOLLAR weekly chart remains in uptrend. It has charted a higher trough (HT) followed by a higher peak (HP), which defines the uptrend. Moreover, it is above its black 30-week EMA, with the EMA turned up, and its weekly RSI is comfortably on the bullish side of 50 (blue rectangle).
This bullishness is not surprising given that the US 10-year real rate remains elevated at 1.96% and is greenback supportive.
BoJ and PBoC contribute to USDOLLAR's Monday Pullback
Nevertheless, the USDOLLAR strength has been dented and has started the week with a pullback.
Over the weekend, in an interview with the Yomiuri newspaper, Bank of Japan Governor Ueda expressed that the BoJ might possess sufficient data by the end of the year to decide regarding the possibility of ending negative interest rates.
Market reaction has been strong with USDOLLAR declining today as benchmark JGBs hit 0.7%.
In addition, in China, the PBoC provided a stronger CNY fixing and said that market participants should "maintain a stable market", avoiding speculative trades. This helped contribute to USDOLLAR weakness.
This Week's Data Points May Be USDOLLAR Supportive
Given the USDOLLAR's uptrend, the greenback pullback may be temporary. We will also get significant US data this week that has previously been dollar supportive.
The foremost data point will be the CPI release on Wednesday, which is forecast to show a rebound in inflation. Other data include the NFIB survey, retail sales and industrial production numbers later in the week.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.