The US Dollar Rapidly Returns to the Highs - Threatening a Topside Break

It's been a hectic week throughout markets, and from where we sit with only a few hours remaining till the week's finish, the big story is the reintroduction of bears into US stocks.

Yesterday was particularly significant since statements from FOMC Chair Jerome Powell were interpreted in a fairly hawkish manner, which boosted the US Dollar as stocks continued their downward trend from the Q2 beginning.

The US Dollar had been threatening a pullback earlier this week, and the statements from Chair Powell and a few other Fed members have contributed to it being a very short-term move. Following a new high on Tuesday, equities fell on Wednesday, and the decline continued into Thursday morning. However, the USD low appeared around the Euro open on Thursday morning, and bulls have been hard at work since then, forcing a series of breakouts. They may not be finished yet, as buyers are already bristling at the freshly achieved yearly high.

The levels I examined on Wednesday morning were significant for the move because a preceding level of support coincided with Thursday's breakthrough resistance, displayed at 100.27. This resulted in a breakout to the following level of resistance at 100.57. And that was breached overnight, allowing for the next area of resistance to be built at the previously established yearly high of 101.02. Additionally, there is still bullish breakout potential as the currency is exhibiting a v-shaped reversal, which leaves the door open for additional rises that might result in another new yearly high.

Notably, we are rapidly nearing the FOMC's blackout period, and the bank's May rate decision is projected to be the first in recent memory to raise rates by 50 basis points. Bullish potential exists on both the fundamental and technical levels.

US Dollar Hourly Price Chart