Dollar Outlook: 12/1

by on December 1, 2013 8:39 pm BST

The dollar index is weak but closed the week higher after bouncing of 80.5 a few times throughout the week. There is speculation that the Federal Reserve will taper in December given the recent string of improving data. However, it is less likely given that the Federal Reserve painted a picture of confusion during the last FOMC minutes.

This coming week will be important for the dollar and will determine where it heads from here. The latter half of the week will be very important as the unemployment claims, non-farm payrolls and prelim QoQ GDP to round it out. The European Central Bank (ECB) will also determine whether or not to further cut rates, which will impact the dollar indirectly.

Positive data will further fuel speculation on a taper. Sentiment on the dollar is still weak.

If support is broken, the dollar will trade down and revisit 79.50. Upward movement is being capped by the 20 and 50 EMA which is doubling up as resistance. A break above could lead price action higher to the short-term descending trend line at 81.095.

1D Chart of DX

1D Chart of DX