The US Dollar faces slight selling pressure on Monday.

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• The US Dollar faces slight selling pressure on Monday.
• Traders brace for US GDP, PCE data and ECB decision this week.
• The US Dollar Index looks set to sell off as it is unable to breach through technical resistance.

The US Dollar (USD) is opening the week a bit on the backfoot. Some selling pressure appeared in Asia on early Monday morning, ahead of a packed week with a lot of data points. The busy week in the macroeconomic calendar comes along with no speeches from US Federal Reserve (Fed) officials as they are in their blackout period ahead of the January 31 rate decision.

On the economic front, the main elements will come on Thursday and Friday, with the US Gross Domestic Product (GDP) numbers and the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, respectively.. The European Central Bank (ECB) and its Chairman Christine Lagarde will also decide on its monetary policy on Thursday. Until then, a very quiet start of the week is ahead on Monday, with no big economic data points scheduled.

The US Dollar Index (DXY) is facing substantial selling pressure. A daily chart shows a third consecutive day with lower highs and lower lows. This points to increasing selling pressure, while the DXY is failing to hold ground above the very important technical levels in the form of the 200-day Simple Moving Average (SMA) at 103.47 and the 55-day SMA at 103.28.

There are some economic data points that could still build a case for the DXY to get through those two moving averages again and run away. Look for 104.44 as the first resistance level on the upside, in the form of the 100-day SMA. If that gets scattered as well, nothing will hold the DXY from heading to either 105.88 or 107.20, the high of September.

A bull trap looks to be underway, where US Dollar bulls were caught buying into the Greenback when it broke above both the 55-day and the 200-day SMA in last week’s trading. Price action could decline substantially and force US Dollar bulls to sell their positions at a loss. This would see the DXY first drop to 102.60, at the ascending trend line from September. Once below it, the downturn is open towards 102.00.

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