The Risk Events May Affect DXY This Week
High volatility will very likely continue this week considering the high profile events featured. Firstly, the “deadline” of December 15 for US-China trade negotiation approaches. We’ll quickly know if there is a deal, or at least progress, to avert the new tariffs on USD 156B of Chinese imports. Secondly, GBP is currently pricing in a Conservative majority after December 12 elections. With that, Prime Minister Boris Johnson’s Brexit deal should be approved quickly to pave the way for orderly Brexit on January 31 finally. Thirdly, three central banks will meet - Fed, SNB and ECB. Fed fund futures are pricing in near 100% chance for Fed to stand pat. Yet, the traders would be eager to know if policy makers are projecting Fed to stay on hold throughout next year. It will also be Christine Lagarde’s first ECB meeting as President.
Dollar index dropped to as low as 97.35 last week, a one-month low, which is also about the middle of this year's range, but recovered after that. It also had closed below the lower line of Bollinger Bands (~97.50) but finished the week back inside. The MACD and Slow Stochastics are still reflecting the past downside momentum, and in the current context, they may be less of a guide.
Outlook is starting to look vulnerable again but there is no clear bearishness yet. Current development now raised the chance that Dollar index’s recovery from 97.11 was only a corrective rise, and has completed at 98.54. Next focus will be 97.11 support. A sustained break bellow 97.11 support will lead the bears for testing 200-week SMA (96) and may be would firmly taken out. If that happen, it will suggests that 99.66 is already a medium term top. Further decline would likely be seen to 38.2% retracement on the rise of 88.25 to 99.67 at 95.31 at least.
But until the Dollar index keep moving above 200-day SMA on weekly chart, the uptrend from 88.26 (2018 low) is in favor to extend. Above 98.54 resistance will reaffirm this bullish case and bring retest of 99.67 high first.
What do you think?
Dollar index dropped to as low as 97.35 last week, a one-month low, which is also about the middle of this year's range, but recovered after that. It also had closed below the lower line of Bollinger Bands (~97.50) but finished the week back inside. The MACD and Slow Stochastics are still reflecting the past downside momentum, and in the current context, they may be less of a guide.
Outlook is starting to look vulnerable again but there is no clear bearishness yet. Current development now raised the chance that Dollar index’s recovery from 97.11 was only a corrective rise, and has completed at 98.54. Next focus will be 97.11 support. A sustained break bellow 97.11 support will lead the bears for testing 200-week SMA (96) and may be would firmly taken out. If that happen, it will suggests that 99.66 is already a medium term top. Further decline would likely be seen to 38.2% retracement on the rise of 88.25 to 99.67 at 95.31 at least.
But until the Dollar index keep moving above 200-day SMA on weekly chart, the uptrend from 88.26 (2018 low) is in favor to extend. Above 98.54 resistance will reaffirm this bullish case and bring retest of 99.67 high first.
What do you think?
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