The US dollar rose against most of the major currencies last week, but the upside momentum appeared to be to be dissipating, even before the FBI’s announcement about new Clinton emails. There are a few exceptions like the greenback’s performance against the Japanese yen, Canadian dollar, and Swedish krona. The dollar made new multi-month highs against all three currencies in the last two sessions.

We suspect that much of the near-term good news for the dollar is passed. Next week, the FOMC statement is likely to be similar in tone and substance to the September statement, and the employment report may moderate. On balance, we look for the dollar to correct lower over the next week or so. 

The US Dollar Index snapped a three-week advancing streak. After pushing through 99.00 for the first time since February, the upside momentum faded. The first band of support is seen around 98.00-98.20. A break of 97.60 would be significant. There may be a small bearish divergence with the RSI that did not make new highs with prices, and the MACDs are about to cross lower. The Slow Stochastics have already turned.

The euro found a bid on October 25 near $1.0850. It proceeded to record higher lows for the following three consecutive sessions. The week’s high was recorded after the US reported somewhat stronger than expected Q3 GDP at near $1.0950, but news that the FBI would re-open the investigation into Clinton’s email sent the euro to almost $1.10. Above there, $1.1040-$1.1060 may offer resistance. The $1.0940 area offers initial support. The technical indicators favor additional gains in the sessions ahead.

Before the weekend, the dollar reached JPY105.50, its highest level since late-July. The technical indicators we use suggest there is scope for additional dollar gains, but the market was getting stretched before the Clinton news broke. After reversing lower, the dollar found support near JPY104.50, in front of a near-term trendline. A break of JPY104 could spur another leg lower toward JPY103.20.