The dollar is strengthening today as retail sales beat analyst expectations and was lumped into the series of positive US data fueling speculation of a Federal Reserve taper. Retail sales in November increased .7 percent versus expectations of .6 percent, which was also October’s print, according from the Commerce Department data.
Look for the dollar to gain stability going into the FOMC meeting on December 17. “The dollar could bounce back against some of the currencies that have been doing particularly well, like the euro and sterling, going into the FOMC, as markets cut back on risk,” said Vassili Serebriakov, FX strategist at BNP Paribas.
The dollar had been trending in a descending channel as major peers, particularly the euro, ripped higher. However, the dollar got a boost after the positive retail sales data, which suggest consumer spending is still happening and was the best November print in two years.
The momentum looks to be changing with the ADX above 20 and a potential +/-DMI bullish crossover. However, price action is pushing against some price action resistance at 80.33. The 50 EMA also adds dynamic resistance. If the dollar can close above resistance, an upside target of 80.51 could come in the next session or two.
If resistance holds up, look for the dollar to trade lower to 80.08 with the top of the broken channel to become the new support.
Although the dollar is up in consecutive sessions, sentiment in the dollar is still an enigma. The budget bill will be voted on Friday, reportedly. A rejection can increase volatility.