USD Technical Outlook
- US Dollar Index (DXY) poised for a breakout this week
- Eventful week with FOMC as the large potential mover
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US Dollar Technical Analysis: New Cycle Highs Around the Bend
The US Dollar Index (DXY) has been treading water the previous few days following the CPI print final Tuesday that despatched markets into scramble mode. This week we have now FOMC as the large headline occasion, with BoJ and BoE following throughout the identical 24-hour interval.
From a technical standpoint, the pattern is up and the Dollar index seems poised to interrupt above the latest excessive at 110.78. Whether that occurs pre or submit Fed is after all to be seen. In any occasion it’ll take lots of flip the pattern round, however we may see the DXY weaken near-term earlier than greater.
If that is the case within the very near-term hold the underside of the latest rage at 109.27 in focus as the primary line of help. The index is digesting properly across the July excessive at 109.29. A small breakdown may put in an order for a possible validation of the budding trend-line off the August low.
If an actual bout of promoting is available in then look to the low previous to CPI at 107.68. It seems unlikely we see that stage anytime quickly, however it might probably’t be dominated out given the explosive strikes we have now seen across the Fed.
Seasonality for shares, which is relevant to the greenback given the inverse relationship, is on the weakest level proper now, so this is able to counsel a greenback tailwind. The considering is that we are going to see a brand new cycle low in shares subsequent month and maybe a tradable low.
With the above in thoughts, this is able to imply the greenback is more likely to keep bid for a bit longer earlier than any type of significant correction can develop.
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—Written by Paul Robinson, Market Analyst
You can observe Paul on Twitter at @PaulRobinsonFX
