Dollar’s selloff continued overnight as focus now turns to minutes of April 27-28 FOMC meeting. While markets were a bit nervous on much stronger than expected consumer inflation readings, Fed officials were in unison in toning down the threat. Current jump in price is generally viewed as transitory by the policymakers. On the other hand, recent data like non-farm payrolls and retail sales argue that the recovery might be more vulnerable than it looks. The minutes would reiterate that Fed is still far from even considering tapering nor interest rate normalization.
Dollar index resumed the fall from 93.43 this week and is on track to retest 89.20 low. At this point, it’s rather unsure if such decline is the second leg of the consolidation pattern from 89.20, or it’s resuming the down trend from 102.99. We’ll stay cautious on a strong rebound from 89.20 level. Break of 90.90 resistance will suggest that the near term trend has changed and stronger rebound would be seen back towards 93.43 resistance. Though, firm break of 89.20 will, of course, confirm down trend resumption. In that case, we should see EUR/USD taking out 1.2348 resistance in tandem.
