In my previous piece last week, the only call I made was long GBP/USD. This obviously worked out well, as the currency pair rose by 1.11% over the week.

Last week again saw a still-volatile stock market where the S&P 500 ranged above a supportive 200-day simple moving average. The steady fall in stock valuations has been halted, but the chart still looks relatively dangerous for bulls. Tension over Syria played a role, albeit a relatively minor one. The major event in the Forex market was a release of weaker than expected U.S. inflation data, which had the logical effect of depressing the relatively value of the USD. It remains to be seen how the markets will feel about risk sentiment after the weekend’s events in Syria, although it seems clear an escalation of the conflict is not likely to be imminent, so it may be improved.

Risk and commodity currencies gained over the week, with the Canadian Dollar the strongest performer, which can be explained by the rise in the price of Crude Oil. It seems logical to suggest that tensions in the Middle East have played a part in that rise.

Fundamental Analysis & Market Sentiment

Fundamental analysis tends to support the U.S. Dollar; however, sentiment is contradicting this at present due to poorer than expected inflation data. There is little U.S. data scheduled for next week, so the greenback is likely to be most affected by any new developments concerning U.S./Chinese trade tariffs or Russia/NATO tension.

Technical Analysis

U.S. Dollar Index

This index printed a small bearish engulfing candlestick, within a wider consolidation pattern which has lasted almost three months. This suggests the long-term bearish trend may be continuing, but far from decisively so. The bearish trend is still in force and worth following, but it should be treated with increasing caution regarding its reliability. On the other hand, the fact that all the resistance levels which have formed during this downwards trend are still intact suggests continuing bearishness. Overall, it is an increasingly inconclusive picture – but still bearish.