Talking Points:
- EUR/USD holds below mid-March trendline, looking below $1.0800.
- Waiting for calendar to turn before engaging JPY-crosses short.
The US dollar Index continues to make headway into key short-term resistance levels that could ultimately mark a turning point for the buck. The broader index has turned its attention to the March 23 swing high/March 12 swing low area, with USD/CAD's own technical formation on the H4 timeframe mirroring that of USDOLLAR (despite not being included in the calculation of the index).
While far from clear or guaranteed, these are additional signs that the greenback has and is continuing to work its way through weak hands in the wake of the March 18 FOMC meeting; this past week there was a -10.7% in net-long positions in DXY, per the CFTC's latest COT report.
In a holiday shortened week, our attention is focused on two data that may help the US Dollar re-anchor itself to longer-term fundamental themes: the Euro-Zone CPI report on Tuesday (theme: the Euro-Zone is in a state of inflation disrepair that necessitates QE from the ECB); and the US Nonfarm Payrolls report on Friday (theme: the US labor market maintains its momentum, ultimately forcing a Fed rate hike in 2015).
See the above video for technical considerations in EUR/USD, USD/JPY, USD/CAD, CAD/JPY, and EUR/JPY.
--- Written by Christopher Vecchio, Currency Strategist