This week’s economic docket is relatively light, especially when compared to the outlays of the past few weeks. This can be an opportune time for trends to substantiate as we move deeper into the fourth quarter of the year, and with a heavy tonality of Central Banker-speak on the wires this week, the potential for such drive certainly exists.

My colleague Christopher Vecchio previewed this week’s data earlier this morning, and that’s available in the article entitled, FX Markets Eye Commentary from BoJ and Fed; US Data in Focus. In this article, we’re going to look at three markets of particular interest as some of the more pressing themes currently showing in the FX market.

Dollar Turn or Dollar Burn?

Last week saw USD-strength continue into a very key zone of resistance that runs from 94.08-94.30. This was the fourth consecutive week with the U.S. Dollar gaining value, and this is significant because that’s the first time that’s happened since February-March of this year, before the Fed began talking about balance sheet reduction.

As that topic of balance sheet reduction took over, markets grew skeptical that the Fed would be able to hike rates again this year. If the Fed is shifting their focus to tightening via the balance sheet, and if inflation is already sub-2%, there was little hope for near-term hikes, and this was a driving factor to the major sell-off that showed-up in the Greenback in the second and third quarter of the year. But at Chair Yellen’s speech two weeks ago, she indicated that the bank may not be looking to wait for inflation to tick above 2%, even while beginning to whittle the balance sheet down, and this gave USD strength another shot-in-the-arm.

The Dollar continued higher in the early portion of last week, until running into this key zone of resistance that runs from 94.08-94.30 on DXY, which continues to hold as we kick off this week.

U.S. Dollar via ‘DXY’ Daily: Current Resistance in Key Zone from 94.08-94.30

Chart prepared by James Stanley

This week’s economic docket offers a couple of potential drivers that could impact this trend. Wednesday brings FOMC meeting minutes from the September rate decision, and Friday brings CPI and Advance Retail Sales. All of which are high-impact prints, and each of which can bring fresh buyers or sellers into USD.