• USD down against all peers barring TRY on the week
  • GBPUSD and EURUSD looking to break higher
  • Trump’s tax bill in focus next week

It’s been a bad week for USD bulls with the world’s reserve currency sliding across the board. In fact the only currency that has fared worse since Monday is the Turkish Lira which continues to suffer from president Erdogan’s unorthodox comments surrounding monetary policy. 

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 The USD is set for a fairly heavy week of losses against many of its peers. Only the TRY has fared worse since Monday. Source: xStation

We noted last Wednesday that the USD index (USDIDX on xStation) had experienced some pretty severe technical damage and the subsequent days have seen more depreciation.  The market fell back below the 93 level today and we could be set for a retest of the 2017 lows around the 91 handle going forward. 

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 The USDIDX has continued to decline after breaking key support last week. Source: xStation

As far as individual pairs are concerned the EURUSD has hit its highest level in 2 months today after breaking above the 1.1860 level identified in Thursday’s post. The GBPUSD has also made an attempt to break higher and the market has reached levels above 1.33 not seen since the start of October. Gold is also a beneficiary of the slide in the greenback and a technical overview of the precious metal can be found here

Looking ahead it is clear that the US dollar may require a hand to rise and next week could well provide such a boost with Trump’s tax plan nearing a key point. The $1.4 trillion GOP proposal will face a make-or-break vote as soon as next Thursday and should the bill be passed then it could boost the buck. 

Senate Republicans will be trying to pass the bill but given that it requires at least 50 votes to proceed and they hold a marginal majority with only 52-seats in the chamber there is a chance that it could fail. A failure to pass the bill would add to the frustration seen in passing major reform since taking his place in the Oval Office with several attempts to repeal Obamacare blocked. 

The US dollar rallied sharply following Trump’s unexpected victory last November, but since his inauguration in January it has been in a near constant state of decline. Another political setback next week would heap the pressure on the buck and provide further evidence that an inability to pass key legislation is undermining the notion that a Trump presidency would be USD positive.