US Dollar Basket 20200930 21.54

So we’re in the final hours of Q3 and the rest of this week brings some high-impact data out of the United States. This could serve to extend the near-term bullish trend in USD or, perhaps, may help to bring bears back into the mix to re-test those two-year-lows that came into play earlier this month.

Tomorrow could be especially pensive as we get both PCE and PMI numbers out of the US. The PCE number will give some insight into inflationary pressure; and the day after brings Non-Farm Payrolls so market participants will get an updated view on the employment picture out of the United States. Collectively, these data outlays can help to re-frame the September outlay that saw a noticeable change-of-pace in both stocks and currencies.

Coming into September the US Dollar was beset by a sell-off that had held since the March spike. Prices in USD pushed down to fresh two-year-lows on the first day of the month, running into a giant area of confluent support. That’s where matters begin to shift, and after a support hold in the first couple of weeks of September, buyers got a bit more active last week in helping the currency to push up to a fresh high.
At this point, the monthly chart shows a not-yet-confirmed bullish engulfing pattern. Such formations will often be approached with the aim of bullish continuation, and when taken with the context of long-term support, this can keep the door open for bullish continuation themes into the Q4 open. For this formation to confirm, today’s price action would need to close above the August open at 93.44.

 

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