US DOLLAR INDEX

[PCMAnalyst]

We can see the downward trend line is breaking by happening a positive divergence in the H4 TF. We expect the price to grow by having it stabilized above the trend line.

[PCMAnalyst]

We are witnessing 2 harmonic patterns on the H1 TF. Due to having the time fulfilled, we expect to have the price dropped if the supply pressure exists in the market and having the price stabilized beneath 80.40 simultaneously.

[PCMAnalyst]

We are witnessing 2 harmonic patterns on the H1 TF. Due to having the time fulfilled, we expect to have the price dropped if the supply pressure exists in the market and having the price stabilized beneath 80.40 simultaneously.

[PCMAnalyst]

The price is in a bearish trend and we are seeing the U.S. Dollar Index dropping by having the support level become a resistant level. As long as the downward trend line is not broken around 81.00, there would not be any hope and expectation for the bullish case of the dollar In the market if 81.00 area is not broken

[PCMAnalyst]

U.S. Dollar index On the daily TF, a lower channel breaking is being seen. We expect a slid in the market by having the price stabilized beneath the channel in 79.50 area.

[PCMAnalyst]

On the daily TF, we witnessed a reversal into the channel after the price touched the 78.82 support. As it continues, if the internal downtrend line around 81.00 is strongly broken, we expect a bullish move for the index.

[Yousuf Ali]

30.04.2014

USD is expected to be confined within its broad range as long bond yields remain capped.

The theme from the US remains one of benign growth, i.e. not fast enough to drive a USD surge, but equally, strong enough for a USD surge to remain a prospect. This should continue to add pressure to consensus trades which are negative carry.

The pre-conditions for triggering a more systemic sell-off in markets remain absent. While the indiscriminate risk rally has run its course and naïve carry strategies will struggle, volatility remains extremely low and in this environment we advise investors to focus on currencies where growth prospects are improving, structural reform momentum is positive, and valuation does not pose a significant barrier.

[Yousuf Ali]

The dollar strengthened against the euro following stronger than expected inflation numbers.

The US Bureau of Labor statistics reported that the CPI for All Urban consumers increased 0.4 percent in May on a seasonal adjustment basis. YoY, the all items index increased 2.1 percent before seasonal adjustment.

The inflation data came in at twice the consensus expectation of a YoY increase of 0.2 percent. The data comes as the US federal reserve begins its two day meeting at which it will discuss the pace of its plans to taper is monthly asset purchase programme. It is expected that tomorrow the central bank will announce that it will be slowing its rate of monthly asset purchases by USD10bn to USD35bn.

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[Yousuf Ali]

Analyst highlighted two main points on next week’s FOMC meeting – how will the Fed communicate the liftoff and what is their outlook for the rest of the tightening cycle.

The outcome of the next weeks FOMC meeting has been well telegraphed and a rate hike is a near certain outcome.

The Fed will also telegraph that subsequent hikes will be data dependent and likely very gradual. How will this be communicated?

All the action will be in the third paragraph which describes the forward guidance on rates.

There are two key points that the FOMC will likely want to underscore in this paragraph. First, that the subsequent hikes will be data dependent, and this will continue to include not only economic but also financial variable.

Second, that based on its expectations for the above, the pace of hikes is likely to be gradual.

Chair Yellen has to strike a delicate balance between sounding constructive enough on the economy to justify the hike, and yet not sounding so constructive that the market extrapolates a steeper tightening path.

Given that the market is fully priced for December liftoff, and given the ECB disappointment last week, we do not see a strong impetus for signaling an even slower pace of hikes for next year.

We see better odds that the median estimate of the longer run fed funds rate is adjusted down from 3.5% to 3.25%, possibly also pulling down the 2017 and 2018 forecasts.