USD could steady as markets eye next week’s FOMC decision – Scotiabank

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USD drifts as risk mood improves. Shaun Osborne, Chief FX Strategist at Scotiabank, analyzes Greenback’s outlook.

USD uptrend is looking riper for consolidation or correction

Streaks of consecutive (daily/weekly) gains in the major currencies rarely stretch far into double digits so the broader USD uptrend is looking riper for a consolidation or correction. 

The BBDXY is trading net down on the week and technically signaling a consolidation may develop while the DXY is stretching spread-based gains even more significantly relative to fair value, according to my simple model. 

Bearish cues for the USD are not at all obvious at the moment but the USD could steady as markets eye next week’s FOMC decision.