Recent Price Behaviour
The greenback resumed its decline last week, after a brief respite in the prior week. Technically the US Dollar Index retested the bearish flag structure that had been breached. Several attempts and perfect rejections were observed via the daily time frame, also in proximity to the 50% Fibonacci. The bears made the technical advance on Thursday, in resuming the downside pressure.
On Friday, another chunky wave of downside hit USD fundamentally, following the abysmal U.S jobs report. The jobs added were just 266K vs. expected 990K (previous 770K). Unemployment rate rose to 6.1% vs. expected 5.8% (previous 6.0%). This was pretty much the nail in the coffin and the selling pressure going hand in hand with the technicals noted.
The USD index was forced to drop down to the lowest levels seen in some ten weeks, as price action respects current market structure, which is largely tilted to the downside. Any rallies that are observed or consolidation, continue to be welcomed by the sellers, as an opportunity to further drive the greenback to the deep south.
Fundamental Factors
As noted in the prior USD articles much focus continues to be around the dovish nature of the central bank, the FOMC. An important factor to consider is the ever-increasing monetary policy divergence that is growing, between them and other major central banks.
The likes of the Bank of Canada, and the Bank of England are already taking steps to withdraw some of their respective stimulus. Others will and are gradually exploring, which leave the FOMC steps behind as a consequence USD will continue to suffer.
Trading USD
Many of the dollar’s peers appear to technically also have the upper hand, with any dips being quickly sought as an opportunity to buy. The likes of EUR, GBP, AUD, NZD, CAD, all in firm positions to further gain ground.
Elsewhere, Gold prices and stocks are enjoying the USD weakness, allied with the dovish tone that remains with the FOMC.