NFP will be taking place on 9 March though that doesn’t mean we won’t see some nice moves in the Dollar this week with quite a few tier 1 data releases including PCE, GDP and the first testimony from the new FOMC chair Powell on Wednesday (in that order). We also have some bill auctions on Monday and Tuesday.

PCE is the measure of inflation the Fed use. You have read the recent FOMC meeting minutes, you know why this is important. If not then you know what to do next.

The Dollar is currently neutral and playing piggy in the middle between the top and bottom of the range on the daily chart. Such consolidation provides an opportunity for a breakout and the start of a trend and in such situations, it pays to remain patient. Having said that bulls continue to buy at support and bears continue to sell at resistance so as always, pick your lines and trade your bias or wait for the breakout and trade in the direction of the trend.

I have outlined the scenarios for bulls and bears for the week ahead. I have also included a view on March with next month’s pivot points. Happy trading. Comments and feedback welcome.

Core PCE 12 month trend

Forecast 1.90% prev. 1.30%

Source: www.tradingeconomics.com

PCE 12 month trend

Forecast 2.80% vs. prev. 1.50%

Source: www.tradingeconomics.com

Dollar Index Daily

As you can see price is currently in the middle of the range and below MPP. With no market we look to price to indicate direction and with price coming up off the bottom of the range and the daily stoch being bullish, one would expect price to continue it's move higher to the top of the range. This is scenario A. Currently there is less evidence to support a move back down to the bottom of the range, based on price being bullish, though none the less, this is scenario B. As far as March pivots are concerned, understanding that this week's close could move the pivots up or down, we have MM3 at the top of the range and MS1 at the bottom of the range. Keep an eye on that as we head towards the first day of March. Also note that resistance at 11750/ 11800 is March's MR1. The target for which would be MS1.

Dollar Index Scenario A

If you see scenario A playing out then we would expect price to move down from resistance at MPP/ WPP confluence with bulls buying at WS1 and taking price up to WR1. WR1 is the top of the range . Should price break through resistance waiting for a pullback down to MPP/ WPP confluence would provide support to go long with a target of WR2. Note the H4 stoch is bullish.

Dollar Index Scenario B

If you see scenario B playing out then you would be looking for an opportunity to short at MPP/ WPP confluence with a target of WS2. WS2 is the bottom of the range.

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