Dollar Heading Down

The US Dollar continues to turn lower today as traders digest recent developments. The FOMC minutes yesterday showed that Fed members remain in favour of continued easing, albeit at a gradual pace. Policymakers noted significant uncertainty in the outlook but were in agreement that a cautious approach to continued easing was the best options. Pricing for a further Fed rate cut in December jumped on the back of the release, now at around 65% from as low as 45% last week.

Treasuries Impact

Falling US treasury yields on the back of Trump’s selection of Scott Bressent for Treasury Secretary are also hindering USD here. With Bressent seen as a strong choice, premiums are falling, diverting capital out of treasuries and elsewhere. News of Trump’s planned tariffs on Canada, Mexico and China are also weighing on USD, driving safe haven flows into JPY. Trump outlined plans for a 25% tariff on all products entering the US from those three countries.

Slew of US Data Due

Looking ahead today, traders will be watching incoming US data with advanced GDP, weekly jobless claims, durable goods and core PCE all due. Ahead of the upcoming Thanksgiving holiday, today could be a volatile day for USD if we see any meaningful data developments. Given the current bearish tone, downside surprises are likely to have the most impact with jobless claims in particular a key focus given the Fed’s focus on labour market conditions.

Technical Views

DXY

The failure above 107.25 has seen the market turning sharply lower. Price is now fast approaching a test of the 105.97 level and the broken bear trend line. Bulls need to defend this zone to prevent a deeper move down towards the 104.05 level next, in line with falling momentum studies readings.