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US Dollar: forecast for Aug 31-Sept 6

Kira Iukhtenko

The Fed’s members have become much more dovish in their words after the last week’s market turmoil. However, demand for the US dollar recovered by the end of the week as the US data confirmed the ongoing recovery.

The chance of a rate hike in September went down last week, but it can’t completely written off. Anyway, the market continues pricing in a policy change in 2015.

We expect the US currency to strengthen over the next week. From the technical viewpoint, US Dollar index is forming a bearish triangle on a bullish market – sign of a mid-term trend continuation. Weekly candle with a long lower shadow confirms our short-term bullish view.

US data next week will be in the center of the market attention ahead of the September 17 meeting. Watch the August PMI indices. Most expected day of the week is Friday with its August labor market figures. The NFP release is expected to support the USD demand. 

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