The US dollar is higher against most of its major peers this morning except the Canadian dollar. The currency is especially strong against safe havens such as the Japanese yen and the Swiss franc. Thanks to the strength of the ongoing global bull market, the perceived need for safe havens is falling. Last Friday, the dollar initially fell following worse-than-expected nonfarm payroll numbers. Later in the day, the currency regained its losses and ended higher. While we had warned that the dollar was looking oversold on a daily chart last week, this is no longer the case. Over the longer term, we expect the dollar bear market to continue and the currency is likely to may new lows over the coming weeks. Looking at data from futures markets, speculators remain net long the US dollar index, meaning that the currency has more room to fall. Our short-term and medium-term trending indicators remain bearish.
USD/JPY is up today and currently trading above 113.20. EUR/USD is down slightly and is trading above 1.2010. The pound is down, and GBP/USD is currently above 1.3550.
Looking at economic data this week, markets will be watching upcoming inflation figures. On Tuesday we'll see JOLTS job openings. On Wednesday we'll see export and import prices. On Thursday, we'll get initial jobless claims and core PPI numbers. Friday is the most important day, and we'll see Core CPI, retail sales, and weekly earnings. Last week, nonfarm payrolls numbers missed expectations.
Following the holiday season sell-off, we are downgrading the US dollar to bearish. The currency is neither overbought nor oversold today, and trades within a normal range. This is based on technical indicators when looking at a weekly chart.