Demand increased for the greenback over the course of last week, up 0.71% at the close, according to the US dollar index.
The dollar held steady/traded higher against all of the major currencies.
Strained trade relations between the US and China continued to plague markets, with official talks turning sour after an ensuing exchange of accusations over which side is to blame for the failure to reach a deal.
The trade war is bad for the US and the rest of the world, though, according to many analysts, it hurts the US less.
This possibly explains why the dollar is up despite rising trade pressures.
The technical position shows price action formed a weekly bullish engulfing formation last week, as well as overthrowing weekly resistance at 97.72 and also closing marginally above the 98.00 handle.
In the event further buying is observed, the next upside target on the weekly time-frame can be seen around 99.62.
Meanwhile, in other currencies:
UK Brexit talks
It’s been a rough week for sterling as Brexit talks between the Conservative and Labour Parties continued to no avail.
This, alongside the US dollar index finding its feet above resistance, weighed on the pound, down more than 2.00% vs. the dollar by the close.
Technically, we have the 1.27 in view as support, coupled closely with daily support at 1.2697.
Therefore, this may entice buying and potentially offer the GBP/USD some much-needed respite this week.
US/China trade concerns
With Aussie unemployment ticking higher, US/China trade concerns and the US dollar index switching things to a higher gear, the Australian dollar came under pressure, down 1.89% against the US dollar at the close of trade.
From a technical standpoint, further selling could be in store, with weekly price showing the next downside support target not expected to emerge until 0.6828.
Schedule of Economic News and Events
Last week, the US dollar strengthened against a basket of world currencies.
The dollar index (#DX) updated monthly highs and closed in the positive zone.
Positive economic releases, as well as the growth of the US government bonds yield supported the US currency.
The British pound is still under pressure.
Financial market participants are concerned that Prime Minister Theresa May will not be able to approve her Brexit deal again and may soon face a leadership problem.
Investors expect up-to-date information regarding trade negotiations between Washington and Beijing.
In the upcoming trading week, we recommend paying attention to the following macroeconomic events.
Monday, May 20th
On Monday, the news feed will be fairly calm. A report on Japan’s GDP will be published in the Asian trading session at 02:50 (GMT+3:00).
Tuesday, May 21st
On Tuesday, investors will assess the following statistics:
- RBA monetary policy meeting minutes at 04:30 (GMT+3:00);
- Existing home sales in the US at 17:00 (GMT+3:00).
We also recommend paying attention to the speech by the Fed Chairman and inflation report hearings of the Bank of England.
Wednesday, May 22nd
On Wednesday, we also expect the publication of important economic reports:
- Japan’s trade balance at 02:50 (GMT+3:00);
- Consumer price index in the UK at 11:30 (GMT+3:00);
- Report on retail sales in Canada at 15:30 (GMT+3:00).
At 21:00 (GMT+3:00) investors will assess the FOMC meeting minutes.
Thursday, May 23rd
On Thursday, economic calendar:
- German GDP at 09:00 (GMT+3:00);
- Important economic releases on economic activity in Germany and the Eurozone at 11:00 (GMT+3:00);
- Report on retail sales in the UK at 11:30 (GMT+3:00);
- Account of the ECB monetary policy meeting at 14:30 (GMT+3:00);
- New home sales in the US at 17:00 (GMT+3:00).
Friday, May 24th
On Friday, the trading week will end with the publication of a report on durable goods orders in the United States at 15:30 (GMT+3:00).