As the new trading year starts, one of the big questions for the first quarter is whether the US dollar is going to find some bullish momentum in the short to medium term, and certainly from a technical perspective, the end of 2017, and the first session of 2018 would suggest the answer is no. As I mentioned in my final post of 2017, the line in the sand for the USD was at the 11,930 with the possible support platform building. However, this has since been breached, and with the index now trading at 11,848 and accelerating lower, the US dollar looks set to move deeper into January and down to test the 11,780 area where further possible support now awaits. And the extent of the current bearish sentiment towards the USD is further highlighted on the slower time frames of our currency strength indicator where the currency is heavily oversold on the daily chart, and pointly sharply lower on both the weekly and the monthly. However, short term intra day traders may find an opportunity to buy the USD off the daily lows, and particularly against the Aussie and Kiwi.
From a fundamental perspective, the FED did little to provide any confidence for dollar bulls, as Janet handed the baton on to the next FED chair. Over her tenure, markets gradually lost confidence in her comments to such an extent most were either ignored as irrelevant, or simply seen as saving face, of which the final decision in December was as expected. A face saving exercise once again. This also has been against the backdrop of the US budget which continues to grind on and adding further bearish sentiment.
By Anna Coulling
Charts from NinjaTrader