US dollar index
The USDZAR rallied strongly from support last week and the pair is now looking for another move higher. The dollar index saw another bounce last week and the economic calendar has potential for further volaility in the greenback.
Wednesday brings the release of finalized GDP for the U.S. economy and this is largely priced-in. The big day will be Thursday with PCE inflation numbers and ISM manufacturing figures. The last release of the PMI manufacturing data saw a strong print of 56 and the market is expecting another push higher at 56.3. A number close to that would likely be enough to see dollar gains. The core PCE number is expected to come in at 1.4% and again, if it comes in near predictions then a rally is possible. The Federal Reserve has outlined 2% as the bank’s inflation target so if the market sees prices heating up then the potential for further stimulus and lower rates would diminish.
The final release for the U.S. will be the key Non-Farm Payrolls number on Friday and this will close out an action-packed week for the world’s reserve currency. Analysts are looking for a gain of 875k jobs, alongside a drop in the unemployment rate from 8.4% to 8.2%.
Before the economic releases get started we will have the first Presidential debate between President Trump and Joe Biden. The outcome will drive market expectations for the election result and the resulting economic policies that arise. This could mean a volatile week ahead for the greenback.
On the weekly chart we saw a strong rally in the U.S. dollar from the support levels at 16.30 and this sets the stage for further gains in the greenback. The resistance ahead is at 17.75 with a breakout bringing a potential return to the highs at 19.00. A close back below 16.50 would threaten lower levels with the 15.00 price the first target. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.
