US Dollar Support Test - Descending Triangle - NFP, FOMC

The US Dollar has been pulling back since May 1st, which was the last FOMC rate decision. The Fed sounded dovish there and that led to a sizable pullback.

But it was the data in the month of May that really seemed to help sellers. The NFP report on the 3rd was the first NFP report with the headline number printing below expectations since November. And then the CPI report on May 15th showed Core CPI at a fresh three-year-low, further giving hope that rate cuts may be on the horizon from the FOMC.

The USD has been testing support between April and May swing lows and that zone has so far brought smaller bounces, leading to the build of a bearish trendline. Together, that makes for a descending triangle formation, which is often approached with aim of bearish breakouts.

The low has to be taken out to trigger the formation, however, and that remains the point of emphasis as we approach Non-farm Payrolls tomorrow and the FOMC rate decision next Wednesday.

- JS