DXY Bulls Relax Ahead of Market Events, FOMC and Q2 GDP

26 July 2021 | Updated: 26 July 2021

The DXY – dollar index fell in early Monday trading, weighed down by a surge in risky currencies, although it remains close to its three-and-a-half-month high set last week.

The broader increase stays unchanged, with sustained sideways trading regarded as a plausible scenario ahead of this week’s Fed policy meeting and US GDP data. The market anticipates a more hawkish position from the Fed, as well as a shift in verbiage, signaling the start of the gradual reduction of monetary support, which may happen as early as this year.

The DXY was also bolstered by a quickening US economic recovery, which would influence the Fed’s decision. The economy increased at an annual rate of 8.6% in the second quarter, compared to 6.4 percent in the first. This week, investors will be looking for earnings reports from several S&P 500 businesses. This could affect market tone.

Market Events: FOMC and Q2 GDP

The FOMC meeting on Wednesday will be the center of central bank attention this week. Will it is a repeat of Fed Chairman Powell’s semi-annual testimony to Congress, or will hawks members be able to persuade him that the labor market has made “additional considerable improvement” and that tapering can begin soon? With tech titans FB, AAPL, MSFT, AMZN, and GOOGL reporting earnings this week, earnings will be front and center.

The question will be when the committee will inform the markets that tapering is imminent. Markets will know well in advance before tapering begins, according to Fed Chairman Powell. Powell stated in his most recent testimony that the job market has not made “additional meaningful improvement” to justify tapering. He said in March that there would have to be a streak of positive months of statistics. As a result, while June’s Non-Farm Payroll print was +850,000, May’s revised print was only +583,000 (weaker than expected), and April’s print was only +266,000. (much weaker than estimated). This week, the US will report Core PCE, which is widely regarded as the Fed’s preferred indicator of inflation (although not until Friday, after the FOMC meeting.)

The term “month-end data” refers to information collected at the end of the month. Not only will the FOMC meet this week, but there will be a slew of other economic data items to keep an eye on. We’ll expect releases of US, German, and Eurozone Q2 GDP, as well as German Unemployment Change, Australian CPI, and US Core PCE.

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USDCHF Sustains Upside Run Past 0.9000 Level as US Dollar Index Falls for the 3rd Day in a Row

23 February 2021 | Updated: 23 February 2021

USDCHF Price Analysis – February 23

USDCHF has been outperforming during the European session breaking the above-known barriers. The pair emerges from lows at 0.8949 level while sustaining its upside run past the 0.9000 level. At the moment, US Dollar Index (DXY), is down 0.1% on the day after it rose to a daily high of 90.57 but reversed its direction with US T-bond yields paring early gains.

Key Levels
Resistance Levels: 0.9304, 0.9187, 0.9093
Support Levels: 0.8950, 0.8870, 0.8757
USDCHF Long term Trend: Ranging
After plunging to 0.8949 the USDCHF pair staged a decisive rebound past 0.9000. With the broad-based USD weakness remaining intact on Tuesday, the pair may continue to climb to fresh highs. Looking at the daily picture, the pair is still developing within an ascending movement after its bounce from the prior week low at 0.8871 level.

If price action remains above the ascending trendline, there is scope to test the immediate horizontal barrier at the 0.9045 level. Clearing this key level would see additional gains towards the 0.9093 barriers. If the predetermined resistance level holds, the currency pair could bounce off and re-test the support at 0.8920.
USDCHF Short term Trend: Bullish
The intraday bias in USDCHF stays at the upside for the moment, however, more sideways trading could be seen. On the upside, above 0.9045 level may restart the corrective advance from 0.8757 level. The following goal is the 100% forecast of 0.8757 to 0.9045 from 0.8870 at 0.9187 levels.

Meanwhile, on the downside, the breach of 0.8870 level may alter bias to the downside for 0.8822 and then 0.8757 low level. The exchange rate could likely gain support from the moving average 5 and 13 around 0.8970 and the horizontal support at 0.8950. Thus, some upside potential could prevail in the market.

Note: Learn2.Trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results

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Dollar Index Confronts Support Zone After a Downside Breakout

6 December 2020 | Updated: 6 December 2020

The dollar index finally resumed its medium-term downtrend from 102.99 last week and hit a low of 90.47. While the daily moving averages are showing signs of accelerating downward movement, the RSI indicates that the DXY is already deeply oversold. There is the prospect of some support at the psychological 90 level, which coincides with the 61.8% forecast from 102.99 to 91.74 from 94.30 to 90.00.

The dollar sell-off was the main topic in the foreign exchange markets last week. With the advent of coronavirus vaccines, the global economy looks set to return to normal next year, despite some cautious comments from central banks.

The yen may look worse than the dollar, but it does still hold above short-term support against most major currencies. The loonie was the strongest, fueled by an upside breakout in oil prices as well as robust employment data. The next strongest positions are followed by the euro and the Swiss franc, while the pound sterling was not too far away. The Australian and New Zealand dollars ended in different directions, while the Australian dollar declined on rising tensions with China.
The Week Ahead: Brexit, Vaccine, GBP/USD
Investors welcomed the U.S. move towards a $908 billion coronavirus relief package and a comprehensive bill to avoid a government shutdown.

The safe-haven US dollar was largely underpowered, falling above two-year lows along with the Japanese yen reducing risks. The euro soared as the British pound hesitated on ongoing Brexit headlines.
Gold prices rose as crude oil took advantage of the OPEC + deal to begin cutting cuts starting in January by less than expected.

With the Brexit final approaching, the (presumably) daily GBP / USD chart is in the spotlight. The price action on Friday shows that the pair opened near daily lows, rallied 100 pips to a new recent high, and failed to close several pips lower than it opened around 1.3420.

Given a possible Brexit deal, continued positive talk about vaccines, and new incentives, markets could be volatile this week. Some volatility will be welcomed in the market as it gives traders more options.

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The US Dollar breaks with the previous 3 week lows

23 November 2020 | Updated: 23 November 2020

The US dollar just broke with the previous 3 week lows (yellow line) to retest the 92.00 level in the European trade session.

 

The US Dollar bearish pressure is still heavy at these levels but the true make it or break it level is the 91.75 which is the September 20th lows and the lows of the entire move down since the Federal Reserve started this new round of Quantitative Easing back in March to face the Coronavirus Pandemic lockdown repercussions.

The overall structure still stands and Wednesday’s FOMC minutes could bring even more bears into this markets should the overall sentiment comes out really dovish again.

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