FX.co ★ Global macro overview for 14/05/2018

The new week investors begin in a cheerful mood, which is visible primarily on the stock market, but on the currency market, it turned into a drift without the advantage of the dollar, that lost the momentum which in recent weeks provided it with a clear appreciation for other currencies. The lack of negative consequences of breaking the nuclear contract with Iran by President Trump and worse than expected US CPI readings allowed regrouping and profit taking and now we are in the phase of waiting for a new impulse. The macroeconomic background is still favorable, while the rest of the world has not yet recovered from the series of signals about the slowdown in economic activity. Despite this, investors are not yet willing to opt for any option (buy or sell USD). Therefore, the nearest hours may pass on a calm anticipation of the new impulse.

In conclusion, the data package from the last two weeks somehow does not give a strong basis for the markets to speculate for a shift in median FED members towards a total of 4 interest rate increases during the upcoming FED meeting on June 13. Even Iran's case did not change it too much, because oil prices have not gone up too high, although if a new agreement with Tehran cannot be worked out in the coming weeks and the sanctions come into force, the prices of the oil may remain at high levels, which in turn will give birth to speculations about inflationary pressures.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. After a top at the level of 93.42, which ended in a Doij candlestick formation, the price has dropped towards the level of 92.34. This level is very close to the dashed channel support and the market can bounce from this level soon. The oversold market conditions support this temporary recovery possibility, but if the market will slide further, the next support is seen at the level of 92.00.