June USD Index Futures Back Beneath 100.000

The Greenback is showing signs of bullish fatigue. June USD Index futures have fallen back below the 100.000 psychological barrier, extending last week’s sell-off. For the time being, rates are trading near the 50% Retracement of March’s range. A mixed performance against the majors is today’s story for the USD.

A few weeks ago, we took an in-depth look at the CME FEDWatch Index and projections for future FED rate moves. Currently, the CME FEDWatch Index is showing a 100% chance of interest rates being held at 0.0%-0.25% until March of 2021. This is a monumental reading that suggests the depth of the COVID-19 economic damage. With 0% rates for the next year, one is inclined to believe that the FED will stop at nothing to preserve the long-term uptrend in U.S. stocks.

Also on the monetary policy news front, reports suggesting that the FED is buying corporate debt with “junk” ratings are hitting the wires. Last Thursday, the FED reported that it was to purchase up to $750 million in corporate bonds via the Federal Reserve Bank of New York. A majority of these bonds will carry investment-grade ratings. However, an undisclosed amount will fail to secure a mark of at least BBB- from S&P and Moody’s analytics.

So, it looks like the FED is going all-in on its QE Unlimited Policy. Shares of distressed ETFs are said to be targeted, as well as highly-leveraged corporate issues. It will be interesting to see if and when inflation sends the USD Index toppling.

June USD Index Back Beneath 100.000

The Easter holiday weekend proved to be a detriment to holders of the USD. Rates have opened the week significantly lower as the markets price in FED QE, government stimulus, and a potential end to the COVID-19 pandemic.

Here are two levels to watch in this market for the near future:

• Resistance(1): Bollinger MP, 99.700
• Support(1): 62% Current Wave Retracement, 98.130

Overview: The key number for June USD Index futures is the 62% Current Wave Retracement at 98.130. As long as prices remain north of this threshold, the bullish trend of mid-March will remain technically valid.

At this point, we are in a holding pattern regarding the USD. However, this week’s releases of Retail Sales (March) and Initial Jobless Claims (April 10) are sure to shake valuations. As the week wears on, be on the lookout for an active United States dollar on the forex.