The Dollar is Blinking: 3 Events to Watch (Feb 16–20)
Price action is flashing a warning signal: The USD failed to rally last week despite solid jobs data. When an asset ignores good news, buyers are usually exhausted.
Is the long-USD trade over? These three events will decide.
1. FOMC Meeting Minutes
📅 Wednesday, Feb 18
The Baseline Status:
Fed Stance: On Hold (Neutral/Hawkish Pause).
Recent Context: Powell’s last press conference was a "nothingburger"—little guidance and no commitment to a pivot.
Market Positioning: Traders are unsure if the Fed is worried about growth or just fixated on sticky inflation.
The Deep Dive:
Because Powell played it so safe during the presser, these Minutes are more valuable than usual. The market is digging for what was actually said behind closed doors. We are looking for the "delta"—the difference between the public statement and the private debate.
The Trade:
Bearish USD: Look for any internal discussions regarding "downside risks" to the economy. If members are getting nervous about growth, the USD sells off.
Bullish USD: If the minutes show a unified front to keep rates high with no urgency to cut, the Dollar likely stabilizes and squeezes shorts.
2. RBNZ Rate Decision
📅 Wednesday, Feb 18
The Baseline Status:
Current Narrative: The RBNZ is often the "canary in the coal mine" for global liquidity.
Key Correlation: Highly sensitive to commodity prices and risk sentiment (equities).
The Deep Dive:
While the Fed steals the spotlight, the Reserve Bank of New Zealand will set the tone for the "Carry Trade." Central bank decisions trump economic data because they instantly reprice the yield curve. The Kiwi (NZD) has been volatile, and this decision will likely spill over into AUD and CAD pairs.
The Trade:
Watch for the divergence between the decision and the statement.
The Trap: If they hold rates but issue a dovish statement (signaling they are ready to cut soon), NZD/USD could flush rapidly.
The Breakout: A hawkish hold (signaling inflation is still the enemy) could act as a slingshot for the Kiwi, putting further pressure on the USD.
3. US Flash Services & Manufacturing PMIs
📅 Friday, Feb 20
The Baseline Status:
Data Type: Forward-looking (Leading Indicator).
Current Trend: The market fears a slowdown (hence the weak USD reaction to NFP).
Consensus: Markets are looking for confirmation of economic cooling.
The Deep Dive:
Non-Farm Payrolls are backward-looking (history). PMIs are forward-looking (forecast). This is the sentiment check the market needs to confirm the "USD Weakness" thesis. The narrative right now is that the U.S. engine is sputtering; Friday is the reality check.
The Trade:
The Trend Follow: A weak print (contraction or missing expectations) confirms the economy is cooling. This validates last week’s price action and likely pushes the DXY lower into the weekend.
The Contrarian Play: A hot print (strong expansion) contradicts the current bearish narrative. If this happens, expect a sharp reversal as traders positioned for a "soft landing" get caught offside.
Summary
The Dollar is vulnerable, and positioning is stretched.
Wed: Watch FOMC for sentiment.
Wed: Watch RBNZ for risk appetite.
Fri: Watch PMIs for economic reality.
Trade safe, watch your levels, and don't fight the tape.
