Markets might have had a slow start to the week, but that quickly changed on Tuesday. After US CPI came out in line with expectations, US President Donald Trump dropped a bit of a bombshell on markets by firing Secretary of State Rex Tillerson.

The USD didn’t respond all that well to the move and fell away over the course of the US session.

That meant there was a bit of upside in some of the majors such as the EUR/USD and GBP/USD.

There’s more big data scheduled for Wednesday with most of the focus on US retail sales.

Head and Shoulders Pattern

There is some degree of support in the DXY sitting at 89.50.  But having a closer look at the charts, it looks a lot like a head and shoulders pattern is forming.

That’s a bearish sign for the USD, which only last week started to find some buying interest.

However, the price action appears to be bearish in the short-term so I suspect we might be set for a breakout below support. That means we could be setting up for another crack at 88.50 which would mean the majors could see some upside against the USD.

US Dollar Index (DXY)- 240 min Chart.