Exactly a week ago, we highlighted some of the fundamental and technical signs that the euro/U.S. dollar (EUR/USD) currency pair’s 16-month uptrend was finally coming to an end (see “EUR/USD: Nascent signs of a potential top, will the ECB blink?” for more).
While we were focused on developments on the East side of the Atlantic last week (including the ECB meeting), the market’s focus is shifting westwards this week, with the May Federal Reserve meeting set to conclude tomorrow and the always-impactful Non-Farm Payrolls report on Friday. Accordingly, we’re focusing on the outlook for the U.S. Dollar Index (DXY) today.…and what a run it’s had!
The index has surged by 300 pips in the last two weeks, bringing the most-followed measure of dollar strength back into positive territory for the year. As of writing, DXY is approaching its year-to-date high, and a key previous support/resistance level, at 92.60. After such a strong run in such a short period of time, we wouldn’t be surprised to see dollar bulls take some profits around that barrier.