DXY Broke Vital Resistance! Retail sales in focus this week

Last week was vital and perhaps the most important week for the DXY this year, as it has likely broken a crucial resistance. As seen from the main chart, the weekly candle needed a convincing close above 94.60 which confirms the previous high break. Now it is highly likely in the coming weeks we could see the price targeting the next high at 97.60. Prices would likely be supported by the weekly EMA and ascending channel.

LIKELY FUNDAMENTAL DRIVERS FOR DXY THIS WEEK

• The main talking point here remains the indications of stronger economic activity may keep the Greenback afloat and put pressure on the Federal Reserve to implement higher interest rates sooner rather than later.
  

The latest uptrend in the USD comes on the back of the better than expected rise in the CPI and this week an update to Retail Sales would likely generate a bullish scenario on the USD as household spending is expected to increase for the third month in a row.

As a result, signs of uptick in inflation along with evidence of stronger activity may push the FOMC to forecast a steeper path for US interest rates

With that said, the US Retail Sales report may generate a bullish reaction in the Dollar as the update is expected to show a pickup in household spending, and the DXY may continue to trade to fresh 2021 highs throughout the remainder of the year as the FOMC starts to scale back monetary support.