US DOLLAR FORECAST: FED POLICY RESPONSE, TRUMP CORONAVIRUS GUIDELINES, S&P 500 EARNINGS SEASON IN FOCUS
- The US Dollar[1] edged marginally higher over the last 5 trading sessions judging by the DXY Index as coronavirus optimism waned
- US Dollar could rally with the Fed set to slow blond purchases or if another wave of investor pessimism is sparked by shockingly poor S&P 500[2] earnings and economic data
- USD[3] price action might face headwinds if President Trump’s coronavirus guidelines for opening back up the US economy propels risk appetite
The US Dollar climbed by a quarter of a percent on balance this past week as measured by the DXY Index. Major currency pairs[4] have gyrated recently owing to mixed USD price action and an unclear direction[5] for the broader US Dollar.
This likely stemmed from recent coronavirus updates, such as the pandemic’s horrific impact on economic data and anecdotal evidence that an effective COVID-19 treatment might be near, which have corresponded with violent shifts in trader sentiment and swings in the US Dollar.
DXY – US DOLLAR INDEX PRICE CHART: 1-HOUR TIME FRAME (10 APRIL TO 17 APRIL 2020)
Chart created by @RichDvorakFX[6] with TradingView[7]
Looking ahead to next week, the US Dollar is anticipated to continue its ebb and flow around the latest coronavirus news. Particular attention might be paid to changes in Federal Reserve[8] stimulus efforts, strategies outlined for ending the coronavirus lockdown and restarting economic activity, as well as S&P 500 earnings season[9].
The Fed balance sheet appears headed ‘to QE-finity and beyond’ after the FOMC[10] unleashed plans to purchase Treasuries “in amounts deemed necessary.” Aimed
