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Uncle Sam is printing closely-watched reports today!

Will today’s US retail sales and FOMC minutes releases bust the dollar out of its short-term downtrends?

I’m looking at the U.S. dollar index for clues.

U.S. Dollar Index (DXY): 1-hour

U.S. Dollar Index (DXY) 1-hour Chart

U.S. Dollar Index (DXY) 1-hour Chart

Later today at 12:30 pm GMT the U.S. will publish its July retail activity. Markets expect the headline and core figures to reflect slowdowns in spending and likely keep investors worried about another economic contraction.

Then, at 6:00 pm GMT the Fed will release the minutes of its July meeting. If you recall, the FOMC gang raised its interest rates by an expected 75 basis points with Fed Chairman Powell hinting that another “unusually large increase may be appropriate.

Much lower than expected retail sales figures would not only support speculations of “peak inflation” in the U.S., but also encourage FOMC members to maybe slow down their tightening schedule.

The dollar could take hits against its higher-yielding counterparts and drag the Dollar Index (DXY) from its current levels to previous areas of interest like 106.00 or 105.50.

But maybe traders are done selling USD for now.

As you can see, DXY is testing the upper limits of its descending channel and it probably won’t take much to force an upside breakout.

If today’s market themes focus on global growth concerns, or if the Fed’s meeting minutes points to the members leaning towards aggressive rate hikes despite recession concerns, then DXY might break out of its channel.

The index could revisit its 107.00 August highs or head for the 107.30 previous inflection point.

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