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Risk aversion made the dollar king of pips last week.

Can the bulls maintain their momentum with this week’s catalysts?

Here are the main themes that you need to keep an eye on:

Closely watched PMIs

  • Markets see Philadelphia’s manufacturing PMI (May 21, 12:30 pm GMT) at -40.0 after printing at -56.6 in April
  • Markit’s manufacturing PMI (May 21, 1:45 pm GMT) could improve from 36.1 to 37.5 in May
  • Services PMI (May 21, 1:45 pm GMT) could also jump from 26.7 to 32.6

Powell’s speeches

Fed head honcho Jerome Powell will share his two cents at least three times this week:

  • In an interview conducted by CBS’ 60 minutes (May 17, 11:00 pm GMT)
  • In his testimony before the Senate Banking, Housing, and Urban Affairs Committee to talk Coronavirus Aid, Relief, and the Economic Security Act with Treasury Secretary Steven Mnuchin (May 19, 2:00 pm GMT)
  • In his opening remarks at the “Fed Listens” COVID-related event via satellite (May 21, 6:30 pm GMT)

The FOMC meeting minutes (May 20, 6:00 pm GMT) can also clue us in on policy options being discussed

Dollar demand

  • Escalating trade conflict between the U.S. and China can support demand for the “safe haven” dollar
  • The Fed’s commitment to NOT use negative interest rates as well as their economic projections given different post-lockdown scenarios can affect overall risk-taking
  • Traders will look at the reopening of key economic states and watch out for (1) the possibility of a “second wave” of infections and (2) the scale of “recovery” that comes with easing lockdown measures

Technical snapshot

  • Stochastic believes that the dollar is “overbought” against NZD, GBP, and EUR on the daily time frame
USD Forex Pairs Stochastic from MarketMilk
USD Forex Pairs Stochastic from MarketMilk
  • The dollar is on long-term (according to the 50 and 200 SMAs) bullish trends against the euro, pound, Kiwi, and Loonie
  • We could see retracements or reversals on AUD/USD and USD/CHF
  • USD/JPY is still on a bearish trend on the daily time frame
USD Forex Pairs SMAs from MarketMilk
USD Forex Pairs SMAs from MarketMilk
  • The dollar was most volatile against NZD, AUD, GBP, and CAD in the last seven days
USD Forex Pairs Volatility from MarketMilk
USD Forex Pairs Volatility from MarketMilk

Missed last week’s price action? Read USD’s price recap for May 11 – 15!