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The Greenback had some trouble extending its gains late last week. Will this mean reversal for the low-yielding currency this week?

Retail sales report (May 15, 12:30 pm GMT)

An upbeat retail sales report in March hinted that consumers might be getting confident enough in Trump’s tax cuts to start spending again.

Specifically, big-ticket products such as automobile and sales in furniture and home stores saw faster rate of spending from consumers.

This week analysts see a 0.4% uptick in headline retail sales, which is a bit slower than March’s 0.6% increase. Meanwhile, core figures are expected to show a 0.5% improvement on top of March’s 0.2% growth.

FOMC member speeches

Over the next couple of days not one, not two, but FOUR FOMC officials are set to take center stage. Here are their schedules:

  • Loretta Mester (Mon, 6:45 am GMT) in Paris
  • John Williams (Tues, 5:00 pm GMT) in Minneapolis
  • Raphael Bostic (Wed, 12:30 pm GMT) in Georgia
  • Loretta Mester (Fri, 7:00 am GMT) in Frankfurt
  • Lael Brainard (Fri, 1:15 pm GMT) in New York

Remember that investors want to see just how possible it is for Powell and his team to raise interest rates more than thrice this year, so try to read between the lines of their speeches to see if any one (or many) of them are in for a fourth rate hike.

Profit-taking from the previous weeks’ gains?

We already know from updates below that the Greenback had trouble extending its gains when Uncle Sam printed weak data and some traders (supposedly) took profits from their trades.

After slaying its counterparts for the past couple of days, will dollar bulls hand over the reins this week?

Watch out for any technical chart levels or catalysts that might inspire a mid-term reversal for the Greenback!

Last Week’s Price Review

The Greenback is mixed for the week (as of 5:00 pm GMT).  The Greenback is still a net winner, though, so the Greenback’s winning streak isn’t technically over yet. However, the Greenback’s mixed performance does put an end to three straight weeks of Greenback domination.

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

Looking at the overlay of USD pairs above, it looks like the Greenback’s price action was a mixed mess as well.

However, it does get better if we simply remove NZD/USD from the overlay.

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

As you can see above, the Greenback had two-way price action this week since it climbed broadly higher from Monday until the first half of Wednesday before sliding for the rest of the week.

The Greenback started getting bids right from the get-go. There were no apparent catalysts, but some market analysts said that investors were likely buying up the Greenback on the expectation that the Fed is still on track for more rate hikes this year.

The Greenback also apparently acted as a safe-haven currency on Tuesday since it held steady against the safe-havens yen and Swissy but managed to steamroll the rest of its peers as risk aversion raged because of the political troubles in Italy and uncertainty surrounding Trump’s announcement that he was leaving the Iran Deal.

As mentioned earlier, the Greenback’s rally finally began to stall come Wednesday.

Many market analysts mainly blamed the slide in U.S. bond yields as the reason for the Greenback’s weakness. But as noted in Wednesday’s London session recap, the Greenback began to tank before U.S. bond yields did.

I therefore conjectured that the Greenback may have been pulled down because of USD bulls taking some profits off the table. After all, the U.S. CPI report was scheduled for released on Thursday.

Incidentally, other market analysts also adopted the narrative that investors were taking some profits off the table.

Speaking of the U.S. CPI report, the readings for April failed to meet expectations so U.S. bond yields and the Greenback took more hits on Thursday.

The Greenback’s weakness then persisted on Friday, even though there weren’t any apparent catalysts. It’s possible that lingering disappointment over the U.S. CPI miss and falling U.S. bond yields continued to weigh on the Greenback. However, some market analysts also pointed to profit-taking by Greenback bulls.