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Retail Sales Up Next

The Dollar Index is stalled at the 107.70 for now on the back of last week’s rally.  The Fed is now seen cutting rates just once this year, down from the three rate cuts projected earlier in the year. Powell has warned that inflation remains too high and the bank’s easing cycle will likely be postponed depending on how inflation develops from here.
 

US Data Strength

A bumper set of US jobs data has also coloured the picture recently. Looking ahead today, focus will be on the latest set of US retail sales. If we see any surprise upside in this data, this will no doubt reignite bullish sentiment in USD, pushing DXY higher once again. September rate cut chances are hanging in the balance currently, making incoming data highly influential.
 

Fed Commentary in Focus

Away from the data, we also have a slew of Fed policymakers giving comments later today and across the week. On the back of the FOMC, traders will be carefully monitoring these comments for further details given the hawkish shift at the meeting. With inflation forecasts revised higher and the dot plot forecasts revised higher too, traders will be looking to see how much support remains for additional rate cuts or, alternatively, how many Fed members see the risk of easing being postponed until next year.
 

Technical Views

DXY

(Click on image to enlarge)

The rally off the 104.05 level has seen the market breaking back above the 104.97 level and back above the broken bull channel lows. Price is currently stalled against 105.70. However, with momentum studies bullish, focus is on a fresh push higher and a continuation towards 107.04 next. 

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