7/15/2021

This morning, the US posted their weekly jobs data and missed expectations for the fourth time in five weeks. All the while, inflation is growing at a faster rate than it has in decades reaching 5.4%. None of this looks good for the economy, but this could be good news for the US dollar.

Our outlook

I find it increasingly likely that investors could see the Fed raising rates sooner than anticipated or even more than twice by 2023. The expectation of capping inflation and raising rates could be the catalyst that sparks USD's recovery and further momentum to the upside. Powell's testimony has told us that the Fed is still not as concerned with inflation, they're still holding on to their asset purchases, and tapering is still a "ways off".

Trade Setups

DXY

The dollar index is still respecting its rising trend line on the 4H as recent candles show rejection from the lows. We could expect another dip to also bounce off this rising trendline, or we could see price test a double top around 92.808.

USDJPY

UJ pulling back a little bit today after growing economic concerns in the US mount. The pair recently bounced off the bottom of a channel trend line suggesting that this level is a reliable support line. Price could come up to test resistance around 110.400.

GBPUSD

GBPUSD rises today after coming off support from the rising trend line on the 4H. Price could test resistance around 1.39098 which serves as a significant resistance level; a break would be considerably bullish for the pair. However, a retrace could send it back down to its trend line.