Talking Points:
- Global markets took a step back from the ledges of risk aversion yesterday, and this helped to soften the US Dollar after an aggressive sell-off in EUR/USD[1] helped DXY[2] to test the 95.00 level. As political volatility in Europe has started to calm, EUR/USD has put-in a 23.6% retracement of the prior bearish move, and currently sits at a big zone of resistance as we approach the release of tomorrow’s Non-Farm Payroll data out of the United States.
- One of the knock-on effects of this week’s earlier flare of volatility was a pullback in expectations for rate hikes out of the Fed this year, and the prospect of four rate hikes in 2018 now looks not so certain. This has helped that pullback in the US Dollar, and market participants will be focusing on data as we approach that next FOMC[3] rate decision in a couple of weeks. While a hike in June is still high-probability, the larger focus will be on the Fed’s dot plot matrix, looking at whether the bank is leaning towards an additional one or two hikes in 2018.
- DailyFX Forecasts have been updated for Q2, and are available from the DailyFX Trading Guides page[4]. If you’re looking to improve your trading approach, check out Traits of Successful Traders[5]. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide[6].
Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator[7].
