The dollar index, which tracks the value of the greenback, against the basket of the currencies, rose to 91.08 in Asia - the highest level since January 12, as the 10-year treasury yield remains on the hunt for a big break above the 3 percent mark.
We will look at the picture available on the charts.
USDJPY 4H shows the rally being not taken forward for over 16 hours. This is clearly a lack of appetite for the longs. We see a fast correction to 200 MA at 106.6
USDJPY daily trendline at 108.9 has been tested. The rally yesterday has not seen any follow thru. This confirms our thesis that we
are headed to 107.4 which is the starting point of the rally.
Pin bar in dollar index at 91 is good reersal signal. The index is now headed to 90 this week.
Bullish engulfing on 4h on GBPUSD is good bottom signal. Long at 1.3940 with stop 1.3910 for 1.4080 is a good trade
The United States recorded a Current Account deficit of 2.40 percent of the country's Gross Domestic Product in 2017. Current Account to GDP in the United States averaged -2.64 percent from 1980 until 2017, reaching an all time high of 0.20 percent in 1981 and a record low of -6 percent in 2006.
The US budget deficit widened to USD 666 billion, or 3.5 percent of GDP, in the fiscal year 2017 from USD 586 billion, or 3.2 percent of GDP, in the previous fiscal year. Spending rose 3 percent to an all-time high of USD 3.981 trillion, while revenues increased at a slower 1 percent to a record USD 3.315 trillion. Accounting for calendar adjustments, the 2017 fiscal year deficit was USD 644 billion compared with USD 546 billion the prior year. Government Budget in the United States averaged -2.13 percent of GDP from 1948 until 2017, reaching an all time high of 4.50 percent of GDP in 1948 and a record low of -9.80 percent of GDP in 2009.
Summary: We are aware of the strong rally in dollar yesterday but we do not see any change in dollar long term direction. The fiscal deficits and trade deficits in the US is a reality and it will not allow the dollar to rally beyond 91. The big black variable in all this is the US 10 year yield which is just below 3%.