US Dollar has Counter Trend Action, But Ultimately, We Expect Trends to Continue

July 20, 2018 10:18AM CDT

While the president has a small chance of restraining the Fed, comments challenging the Fed have had a knee-jerk reaction of pulling the dollar back from the highs yesterday.  However, it is possible that the presidents concern of the international trade threat associated with higher USD is an argument that the Fed will consider in their policy decisions.  In other words, not because of what the president said, but because of the real actual negative potential impact on US export competitiveness the Fed will have to pay attention to the rising dollar.  Therefore, an intermediate top appears to be in place in the dollar and some normal back and fill action is likely considering the thin US economic report slate today.  Initial corrective targeting in the September dollar index is seen down at 94.60 but ranges are likely to be narrow unless there is a surprise over the weekend in the trade war.

The USD made a new contract high on the rally and momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated.  Next upside target is 95.80.  Resistance comes in at 95.30 with support at 94.60.

US Dollar Sep '18 Daily Chart

US Dollar Sep '18 Daily Chart

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