Can DXY Stabilize at 99.50-100 Area Despite FED 50bp Cut?
Dollar Index – DXY has turned bearish after the corrective rally stopped at 105.70-106, an important resistance area at the end of June. Since then, the price even accelerated lower through summer so it appears that a bearish impulse is in play, but with recent touch of a new swing low, DXY is possibly in fifth wave, so be aware of some support in weeks ahead. But closer look shows that there is still some room left for 99.50-100 area, but if this will occur and structure a wedge shape, then we should be aware of reversals, and new correction.
So as said, the price could still see a bit more weakness into the 5th wave to fully complete this ending diagonal, but then dollar can turn for a new correction, considering that recent dollar weakness has been mainly driven by these rate cut expectations, so now that this 50bp cut has been done, the dollar may stabilize due to a “buy the rumor, sell the news” effect.
However, any rally will be temporary, as I think that dollar has room for much more weakness, bu ideally after another a-b-c recovery.
101.80 -102 is strong resistance.
GH
So as said, the price could still see a bit more weakness into the 5th wave to fully complete this ending diagonal, but then dollar can turn for a new correction, considering that recent dollar weakness has been mainly driven by these rate cut expectations, so now that this 50bp cut has been done, the dollar may stabilize due to a “buy the rumor, sell the news” effect.
However, any rally will be temporary, as I think that dollar has room for much more weakness, bu ideally after another a-b-c recovery.
101.80 -102 is strong resistance.
GH
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