Talking Points:

- The US Dollar is showing a mild bounce from support this morning, with EUR/USD[1] and GBP/USD[2] both pulling back after a disappointing release of US retail sales. USD[3] had run down to support after the sell-off that showed yesterday on the back of US inflation numbers, which came-in above 2% for the sixth consecutive month of at-or-above target inflation. Positive factors, such as we saw yesterday, have brought upon USD-weakness [4]while negative factors, such as we saw in Friday’s NFP report[5] with the lagging Average Hourly Earnings are bringing on USD-weakness; deductively indicating that there’s something else doing the driving here. We discussed what that may be in this week’s Fundamental Forecast on USD entitled, Burning Coals and US Treasuries: USD Remains in the Fiscal Cross-Fire[6].

- The next big item around the US Dollar is next week’s FOMC[7] rate decision, currently carrying a 88.8% probability of getting a hike. Perhaps more pressing to near-term USD price action is whether markets begin to expect a fourth hike this year versus the current three hikes. If we do see odds for a fourth hike push-higher, this could create a short-term element of strength around USD that could, potentially, offer attractive entries into the longer-term bearish trend.

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If you’re looking for longer-term analysis on US Stocks, the Euro[10] or the U.S. Dollar, click here for our Trading Guides[11].

US Dollar Bounces From Short-Term Support

The US Dollar is showing[12] a mild bounce from support this morning after Retail Sales figures for the month of February printed in a rather disappointing manner. The expectation was for a .3% gain, and the actual print was for a -.1% contraction. This comes on the heels of last month’s -.1% contraction (this was revised up from a prior release of -.3%) and December’s .1% gain. All in all, this continues to show a bit of weakness in the segment of the American economy that’s continued to drive in the post-Financial Collapse environment.

In the US Dollar, yesterday’s sell-off[13] on the back of the inflation report released earlier in the morning continues to loom large, as that move pushed DXY[14] back-below 90.00 and that theme of weakness largely continued throughout the US session and well-into Asia. A bit of support began to show in DXY around an area that has helped to hold the lows over the past few weeks; and this morning’s retail sales report is helping

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