DXY
1) Overly extended candle on the last hour before market closure
2) Strong immediate support nearing
3) Price levels make play above the 50% Fibo mark
4) Overall Strength of dollar is Good
Markets are still focused on reopening hopes despite disturbances seen this week in the form of US-China trade concerns and poor economic readings. Further assessment of the on-going economic conditions will be conducted in the coming week expecting a series of high frequency indicators.
US-China trade tensions appear to have somewhat neutralized this week following news of US and China trade negotiators agreeing to work together to implement trade deal. This follows recent spate of data showing a significant drop in Chinese imports from the US, in part due to the Covid-19 effect on demand. Details have yet to be seen and will be important to keep the positive sentiment going in the coming weeks.
US data release will be in abundance in the coming week, placing particular focus on April CPI, retail sales, industrial production and the preliminary May University of Michigan sentiment indicators. It is perhaps with little doubt that we are expecting some of the worst readings from April given the lockdown situation. That said, the US market had largely shrugged off the poor readings so far, thus the same may apply here.
The May UoM sentiment will however be a leading indicator, one to watch for any market reactions. Consensus points to a continued deterioration.