USD remains in a clear uptrend - Westpac

USD remains in a clear uptrend though the impressive breadth and velocity that featured early in the move higher are both more cautionary, according to Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“The USD rising against fewer currencies this week and the mostly correction-free ascent has left the USD extended.”

“The bullish narrative based on relatively stronger US data is looking somewhat frayed too, key PMIs and average hourly earnings coming in shy of expectations, dragging our Eurozone-US surprise index differential higher, back in EUR’s favour. An FOMC that stresses the “symmetric” nature of their inflation objective diminishes the chances of a hawkish Fed too.”

“Against that, the absolute level of yield support remains far too enticing and the USD still has yet to reach key minimum retracements for the bigger 15 month decline.”