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It’s Trump’s last days as POTUS!

Will we see a smooth transition? More importantly, how will traders react to this week’s likely crazy headlines?

If you’re planning on trading the dollar in the next coupla days, then you’ll want to

Leadership turnover

  • President-elect Biden will officially be POTUS on Wednesday noon
  • Civil unrest aside, traders expect a smooth transition process
  • Keep an eye out for some Trump impeachment drama as the Senate returns to session on Tuesday
  • Former Fed Chairman Janet Yellen will have her confirmation hearing on Jan 19 where we can get clues on her policy biases as Treasury Secretary

Lower-tier economic releases

  • Initial jobless claims (Jan 21, 1:30 pm GMT) is expected to print at 915K after spiking to 965K
  • Markit’s manufacturing PMI (Jan 22, 2:45 pm GMT) to slip from 57.1 to 56.0?
  • Markit’s services PMI seen weakening from 54.8 to 54.3
  • Existing home sales (Jan 22, 3:00 pm GMT) could dip by another 1.0% after 2.5% decline in November

Overall dollar demand

  • Unless we see fresh market themes, the dollar could continue to edge higher against its counterparts after vaccine optimism has been priced in and traders start worrying about longer-term recovery prospects
  • Policy announcement from the BOC, BOJ, and ECB could re-energize easy policy celebrations and drag the safe-haven dollar lower

Technical snapshot

  • Stochastic is showing the dollar’s overbought conditions against the euro and franc
  • USD looks headed towards oversold levels against GBP, AUD, and CAD
USD Forex Pairs Stochastic from MarketMilk
USD Forex Pairs Stochastic from MarketMilk
  • EMAs reflect the short-term demand for the dollar
  • Watch out for retracement or reversal setups on AUD/USD and GBP/USD
USD Forex Pairs EMAs from MarketMilk
USD Forex Pairs EMAs from MarketMilk
  • The dollar was most volatile against the comdolls and the pound 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 Jan. 11 – 15!