Despite the Fireworks, USD in Range

US Dollar Price Analysis

The US Dollar has moved through the end of Q2 and into Q3 in a range-bound state.
The economic horizon remains very opaque as the coronavirus risk factor does not yet appear to be in the rearview.
Continued economic pressure is likely to be met with even more passiveness from the Federal Reserve, which could bring further impact to USD-weakness.

US Dollar Settles in Range to Open the Second Half of 2020

After a very busy first half of the year the US Dollar has worked into yet another range-bound formation as the door opens into Q3. To be sure, this isn’t the first range that’s showed in the US Dollar of recent, and the currency actually spent the bulk of Q2 in a very similar state.

Sellers took a shot in late-May and that produced a bearish trend that ran through the first ten days of June. Support finally set in at a confluent area on the chart, taken from the 95.86-96.05 area; and that helped to cauterize the sell-off, and since then USD has been in the midst of what has so far been a rather consistent range.

US Dollar Four-Hour Price Chart

Chart prepared by James Stanley; USD on Tradingview

As the door opens into the second half of the year, a number of risk events remain on the horizon and it’s difficult to imagine how that series of risk events may be navigated without continued dovish actions (or pledges for such) from the Federal Reserve. The coronavirus is still not a ‘game over’ theme and a pensive Presidential Election waits in the cards for November. And while equity markets have shrugged off much of that Q1 fear.

The big question, of course, is one of economic growth and how soon that may return after the coronavirus-related slowdowns. While many were hoping for a V-shaped recovery, given recent events towards the end of Q2 that prospect is becoming more difficult to expect. And as new case numbers increase, there is a very real fear of another swell of the virus inducing even more shutdowns and closures.

For the US Dollar – this can potentially entail more weakness, and in the technical portion of this quarter’s forecast, I focused in on that backdrop, and the full report is available by clicking on the box below.