DOLLAR BEARS COME BACK TO BREAK DXY BELOW 90.00

The Thursday-turnaround in the US Dollar has largely reversed last week’s strength, and price action in USD appears to be trying to find some support around 89.50. This is near last week’s swing low as well as the 50% retracement over the bullish move that showed-up in the second half of February to run into last week’s high. The next big USD-driver is Non-Farm Payrolls on Friday, so there are some other items to sort through before we can begin planning around US-related drivers. We spent a few minutes discussing the likely reason for this persistent weakness, tying this theme of a weak US Dollar along with the continued rise in Treasury Yields.

S&P STUCK IN THE MIDDLE

The S&P 500 remains supported; but we’re at an interesting juncture between the 50% and 61.8% retracements of last week’s bearish move that showed Tuesday-Thursday. This bearish move developed on the back of new Fed Chair Jerome Powell’s first day of testimony; and that weakness has been largely erased by strong outings on Friday and yesterday. But – this does keep the door open for resistance around 2750; and if we get a concerted topside break, the bid is back in US stocks and the door is opened for a retest of last week’s wing high at 2788.

USD/JPY TIP-TOEING BELOW SYMMETRICAL WEDGE

We’ve been following the Yen a bit closer this year as a tonality change has started to show in the currency. While Yen-weakness was a previously reliable theme as we came into 2018 – that has started to come into question as Yen strength has been fairly persistent. This is likely coming from a continued rise in inflation, as December and January both produced 33 and 34-month highs, respectively. The BoJ meets later this week, set to announce their rate decision on Thursday night/Friday morning; but what might they be able to say to pacify investors that the BoJ will continue with ‘pedal to the floor’ levels of liquidity, even as inflation fast-approaches their own 2% target.