Dollar Rallying Ahead of US Data & Warsh Testimony
Dollar Higher On Tuesday
The US Dollar is looking a little firmer today as traders await the latest US data this afternoon as well as scheduled talks between the US and Iran. Despite initially stating it would not take part in a second round of talks, Iran confirmed yesterday that it would send a negotiating team to Pakistan for talks today. Tensions have been elevated again after the US seized an Iranian cargo ship in the Strait of Hormuz, provoking fury from Iran.
Volatility Risks
With the US blockade of the Strait still in place, and Trump threatening a dramatic escalation against Iran if a peace deal is not agreed, uncertainty remains elevated, reflected in better safe-haven demand for USD today. If talks progress well and negotiations get back on track, USD is likely to fall as energy prices weaken again and risk assets rally. However, if talks fail and Trump turns more aggressive, we could see USD spiking higher as risk-aversion takes hold.
US Data On Watch
On the data front, traders will be watching the latest US retail sales release this afternoon. The core monthly figure is forecast to rise to 1.4% from 0.5% prior with headline expected to jump to 1.4% also, from 0.6% prior. If seen, this should keep USD bid through the US session. Focus will then turn to incoming Fed chairman Kevin Warsh who testifies today before the Senate. Warsh’s comments are seen as more likely to fall on the dovish side though any concerns shared around inflationary risks linked to the war could see USD pushing higher.
Technical Views
DXY
The index is trying to get back above the 98.24 level here following the retest of the broken bear channel highs. If bulls can break this cap, focus turn to 99.15 next, with momentum studies stating to pick up also, encouraging the move. If we break down again, 96.63 will be the support to watch next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.