In the aftermath of Friday morning's mostly uneventful jobs report, the U.S. Dollar Index pressed on key near-term trendline support at 101.40, which needs to contain the weakness to avert additional pressure that will morph the near-term pattern (off of the March highs at 102.25/26) into a much less friendly set-up.
All of the action during March is grinding into a near-term (double) top. For USD to resume its otherwise longer-term bull trend, it needs to hurdle and sustain above 102.25, otherwise the price action increasingly suggests that another bout of weakness is approaching within a larger corrective set-up off of the Jan. all-time high at 103.82.
The Macro Picture
What Friday's USD action says about the economy and the next Fed rate hike, from a macro-market perspective, if the dollar weakens, my sense is that the market thinks either 1) that the economy is not as strong as everyone thinks and/or the Trump-growth agenda will take much longer than expected to implement, or 2) that the economy is not as strong as we think and the Fed intends to push ahead with a three-hike plan that in and of itself, will trigger an economic retrenchment.
Market psychology would be so much clearer if the dollar screamed higher on Friday
Whatever the case, all eyes are on the U.S. dollar after Friday's data and into Wednesday's FOMC Statement.
