Talking Points:
– USDOLLAR Breaks Out of Bearish RSI Momentum- Needs Close Above 10,470 Pivot
– GBP/USD Eyes Major Support as BoE Inflation Report Drags on Rate Expectations
– AUD/JPY Range in Focus as Pair Tags Key Resistance (96.00)

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) pared the decline to 10,438 as the marked uptick in the U.S. Producer Price Index (PPI) raised the outlook for inflation, and heightening price pressures may boost the appeal of the greenback as it puts increased pressure on the Federal Reserve to normalize monetary policy sooner rather than later.

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10454.06

10465.35

10438.8

-0.10

87.93%

Indeed, the Consumer Price Index (CPI) may also generate a similar market reaction as the headline reading for inflation is expected to increase an annualized 2.0 percent in April, and the USDOLLAR may make a more meaningful attempt to push back and close above the 10,470 pivot should the data prints coming out of the world’s largest economy prop up interest rate expectations.

With the bullish break in the Relative Strength Index (RSI), we may see a more meaningful dollar rebound in the days ahead, but the Fed policy outlook may continue to drag on the reserve currency as the bar remains high for the central bank to deviate from its current course for monetary policy.

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USDOLLAR Daily

Chart – Created Using FXCM Marketscope 2.0
Need Close Above 10,470 to Favor Larger Rebound
Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
Interim Support: 10,354 to 10,375 (50.0 retracement)

Release

GMT

Expected

Actual

MBA Mortgage Applications (MAY 9)