As you can see in the monthly chart, DXY has bounced off the key support around the 91.30 to 92.00 level once and might possibly bounce off of that level again after hitting it in August through September. However, this comes after a very strong down trend with large red candles. Along the slightly dovish FOMC minutes recently released as well as the lower than expected inflation reading, the case for further downside is quite strong. Additionally, the Republican's waning chances at obtaining significant tax cuts further weaks the dollar. On the other hand, jobs and unemployment data remains strong.
The next rate hike in December is almost fully priced into the market as of now. The few who would still be surprised by the time December comes around will be a thin crowd. Therefore, further downside risks for DXY, in the case of no rate hike in December, are significantly stronger than surprises to the upside. Also, traders will be looking to statements from Fed officials as to clues for pace of future rate hikes beyond December. This should also provide further potential for downside movement in the dollar.
RSI and MACD indicators also suggest further downside bias.
RSI and MACD indicators also suggest further downside bias.
No comments:
Post a Comment