The Fed is up this week! Can Powell and his team help ease the Greenback’s losses?

Or will their decision accelerate the dollar’s downtrends?

Here are the potential catalysts to watch out for if you’re trading the dollar this week:

FOMC statement (Jul 29, 6:00 pm GMT)

  • The Fed’s dovish outlook in mid-June sparked a risk-off move that pushed USD higher against the major currencies
  • With yields low and markets doing relatively well, the Fed has no pressing need to alter its current policies and plans (read: unli-QE, no rate hike until at least 2022)
  • Watch out for change in sentiment over negative interest rates and yield curve control
  • Hints of dovishness or more aggressive policies in the near future could inspire risk appetite

Advance GDP reading (Jul 30, 12:30 pm GMT)

  • Though backward-looking, the advance GDP is our first full glimpse of the economy’s (lack of) growth during the lockdown period
  • GDP fell by 5% in Q1 2020 (the lockdown started in March)
  • Analysts expect that the economy had contracted by around 35% in Q2 2020
  • The declines will be led by consumption, but other components will also see a significant contraction

Lower-tier releases

  • Core durable goods (Jul 27, 12:30 pm GMT) is expected to show another 5.0% increase after a 15.8% jump in May
  • CB consumer confidence (Jul 28, 2:00 pm GMT) to slip from 98.1 to 95.0 in July
  • Pending home sales (Jul 2:00 pm GMT) could gain by another 15% after 44.3% jump in May
  • Crude oil inventories (Jul 2:30 pm GMT) last printed at +4.9M after -7.5M read in May
  • Initial jobless claims (Jul 30, 12:30 pm GMT) could gain by another 1.4M after last week’s 1.42M
  • Core PCE price index (Jul 31, 12:30 pm GMT) is the Fed’s more preferred gauge of consumer prices

Overall dollar demand

  • Earnings reports by big U.S. companies like Alphabet, Facebook, Amazon, Apple, and General Electric could cause enough volatility to affect the dollar’s intraday trends
  • U.S.’ economic and political tensions against China can influence overall risk sentiment
  • Coronavirus cases in the U.S. and the pace of reopening in key U.S. cities will also affect risk-taking in the markets

Technical snapshot

  • RSI considers the dollar “oversold” against the euro, pound, and franc on the daily time frame
  • It’s also about to hit oversold territory against the comdolls
, USD Weekly Forecast – Markets Wait for GDP and FOMC Releases
USD Forex Pairs RSI from MarketMilk
  • SMAs and EMAs show that the dollar is in short AND long-term downtrends on the daily time frame
, USD Weekly Forecast – Markets Wait for GDP and FOMC Releases
USD Forex Pairs SMAs from MarketMilk
  • USD saw the most volatility against AUD, NZD, EUR, GBP, and CHF in the last seven days
, USD Weekly Forecast – Markets Wait for GDP and FOMC Releases
USD Forex Pairs Volatility from MarketMilk

Missed last week’s price action? Read USD’s price recap for July 20 – 24! 



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