Global macro overview for 18/07/2017:
Last week was terrible for the US Dollar. First, Patrick Harke, the President of FED in Philadelphia, dropped the hawkish stance, then Janet Yellen softened her remarks in front of the US Congress, and on Friday, a downbeat supply of US economic data hit the financial markets: disappointing were both inflation and retail sales data. As a result, the probability of a September interest rate hike fell to 42.3% and the US Dollar weakened to levels unseen since October last year.
This week, sell-off in the US Dollar continues on Monday and Tuesday as the empire manufacturing data has been a decent miss in July (9.8 vs.15.2, 19.8 prior). Moreover, the recent news regarding Trump's reform of Obamacare revealed that two more senators announced their opposition to the Republican health care.
The slowdown in the US inflation, which was thought to be "transitory" by the FED, now appears to be turning into a sustained medium-term trend. In the coming days, the economic calendar contains only publications of secondary importance that will not change the perception of the path of inflation and the consequences of FED policy. In conclusion, there is not much chance for the US Dollar to reverse its downward path across the board soon and any more negative news regarding both economic outlook (especially inflation) and Trump's administration plans will only deepen the plunge.
Let's now take a look at the USD/JPY technical picture on the H4 time frame. The price fell out of the golden channel. After a rejection off the level of 112.92, the price is moving downward towards the next techcnial support at the level of 111.71.
