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USD Weekly Outlook: FOMC Minutes Take the Stage

The US dollar continued its broad retreat last week, plunging for a fifth straight week to its lowest level in three-and-a-half months. The technical bias on major US dollar pairs remains largely bearish this week, as the markets prepare for a series of high profile events, including Wednesday’s FOMC meeting minutes.

The dollar index (DXY) closed at 93.14 on Friday, its lowest level since January 20.

Below is a breakdown of the key movers in the forex market this week.


The National Association of Home Builders (NAHB) will release its closely followed housing market index, which captures builder confidence in the housing market. The housing market index is forecast to improve slightly this month to 57 from 56 in April.


Housing data continue on Tuesday with the release of housing starts and building permits. Housing starts are forecast to increase sharply in April. Economists forecast an increase of 9.1 percent to a seasonally adjusted 1.01 million. Building permits are forecast to rise 2.9 percent to a seasonally adjusted 1.072 million.


The Federal Reserve will release the minutes of the April Federal Open Market Committee (FOMC) meetings, where interest rates were kept unchanged at 0.25 percent. The Fed commented on the “transitory” factors dragging down the US economy in the first quarter and said monetary policy may remain accommodative even after employment and inflation approached target levels.

Fed bearishness supported a broad reversal trend for the US dollar, which has yet to recover.


In a week filled with housing data, the National Association of Relators (NAR) will report on existing home sales for April. March existing home sales reached the highest level in 18 months. Sales in April are expected to edge up 0.6 percent to a seasonally adjusted 5.22 million.


The Commerce Department will report on CPI inflation at the end of the week. The consumer price index is forecast to edge up 0.1 percent in April and remain unchanged compared to year-ago levels. So-called core CPI, which strips away food and energy, is forecast to rise 1.7 percent annually compared to 1.8 percent in March.


This week’s releases are expected to reaffirm the bearish direction of the US dollar. The FOMC is unlikely to signal at rate normalization any time soon, while US data could be hit-and-miss, as we’ve seen the past several months.

Internationally, several developments could dictate price action for key US dollar pairs like the EURUSD and GBPUSD. These include:

  • UK April Consumer Price Index (Tuesday)
  • Final Eurozone April CPI (Tuesday)
  • UK Retail Sales (Thursday)
  • European Central Bank President Mario Draghi Speech (Thursday)
  • IFO Germany Business Climate Index (Friday)
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