Dollar holds lower ahead of retail sales data

Is this where the train stops for the dollar? The post-election run higher has been without much pause but finally we might be getting that today. The greenback is down across the board, retracing just a slight bit of the gains from this week. USD/JPY is the biggest loser, down 0.6% to 155.33 currently. However, it is still not quite meeting any key near-term levels just yet.

The 100-hour moving average (red line) is lining up with the 155.00 mark now. And that’s the key level to watch for any shifts in near-term momentum for the pair.

Similarly, EUR/USD may be up 0.4% to 1.0575 but is not yet contesting its own 100-hour moving average of 1.0595 at the moment. That’s a key pair that has arguably played a role in the turnaround against the dollar today, owing to a rebound off the 1.0500 mark from yesterday. For some context on the importance of said level: EUR/USD feels the inevitable pull towards 1.0500 next

Besides that, GBP/USD is up 0.2% to 1.2690 and USD/CAD down 0.2% to 1.4035 currently. And AUD/USD is up 0.4% to 0.6475 with NZD/USD up 0.4% to 0.5870. It’s pretty much a case of a very light pullback in the dollar gains since the election result. The greenback is still poised to end the week comfortably higher.

That being said, it’s still worth keeping an eye out in case we see any shifts in near-term biases. That might help to indicate a top in the dollar, at least for this latest rally.

In other markets, stocks are also down with S&P 500 futures lower by 0.5%. Are Trump trades getting a bit of a check back? Bitcoin is up 1.4% to $89,490 but still holding below the $90,000 mark on the day. Meanwhile, 10-year yields are flat at 4.44% and gold is up slightly by 0.2% to $2,572 currently. So, there’s definitely some suggestion there.

The next key risk event on the day will be the US retail sales data release. With Fed chair Powell highlighting the potential for a pause yesterday, a strong report here may well keep market players inclined to lean towards that if other data in the weeks ahead also falls in line.

The expectation is for retail sales to come in at +0.3% month-on-month with the control group reading also estimated at +0.3%.

This article was written by Justin Low at www.forexlive.com.