The US dollar finished last week on a weak footing in the wake of last week’s important US event risks, including a semi-hawkish rate cut from the Powell Fed (a 25-bp cut, but insistence that they wanted to avoid signaling further easing now, with future policy decisions contingent on incoming data), a much stronger than expected payrolls figure for October on Friday (especially due to strong revisions to prior two month’s data of +95k) and a slightly weaker than expected October ISM Manufacturing survey the same day. But the price action is still relatively tepid at best and most USD pairs have yet to administer the knockout blow suggesting that a major USD down move is gearing up – below we take a look at a couple of examples and developments we will be watching for in the coming days and also have a follow-up look at EURSEK after our discussion of the same chart last week.
The US dollar index – more wood to chop beyond the pivot
The EURUSD-heavy USD index (58% of the index) shows that we have yet to see a full breakdown in the US dollar, which doesn’t really swing into gear until the index has properly taken out the local 97.00 pivot on a daily close and really quite a bit more when we zoom out. Note the jagged price action in the wide ascending channel which defines the bigger formation that USD bears need to disrupt before proving that some bigger move lower is afoot.