USD Daily Updates

16 January 2018

The US dollar is looking mixed today. The currency is gaining against the yen, while flat against the euro, the British pound and the Australian dollar. Looking at the US dollar index (a measure of the dollar against six major currencies), the index looks oversold on a daily chart and remains near 3-year lows. In the near future, the dollar is likely to enjoy a short-term relief rally as sentiment towards the currency is at bearish extremes. Longer-term, the dollar bear market is likely to continue as optimism for global growth remains high. Our short-term and medium-term outlook on the dollar remains bearish. 

USD/JPY is up today and currently trading above 110.80. EUR/USD is flat and is trading above 1.2260. The pound is flat, and GBP/USD is currently above 1.3790. 

Looking at economic data this week, markets will be watching industrial production and housing-related data. On Wednesday, we'll see industrial production and capacity utilization. We'll also see the NAHB housing market index. On Thursday we'll see housing data including housing starts and building permits. We'll also get initial jobless claims and the Philly Fed survey. Last week, core CPI was slightly ahead of expectations. 

Updated 
Short term outlook
Bearish

As the dollar weakens thanks to strong GDP growth outside the US, we are downgrading the dollar to bearish. Note that the currency is looking oversold in the short-term time frame. Our analysis is based on various technical indicators when looking at a daily chart of the US dollar index. 

Medium term outlook
Bearish

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. 

Updated