U.S. Dollar Index is near to fall. Soon..
Updated
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against basket of other six major currencies, extends its losses for the 5th consecutive week in a row, hovering below 102 points during the U.S. regular hours on Monday, August 19.
Over the past week, Gold spot (XAUUSD) has topped $2500 per ounce psychological high also, minting new all the history peak, while Forex Eur/Usd (EURUSD) pair just has flashed a positive 2024 YTD return, jumping above 1.10 psychological degree.
The US Dollar continues to weaken following dovish comments from Federal Reserve (Fed) officials, which have increased a new portion of expectations for an interest rate cut by the central bank in September. Furthermore, last week’s US economic data revealed that both the Producer Price Index (PPI) and Consumer Price Index (CPI) suggest that inflation is easing.
Federal Reserve Bank of San Francisco President Mary Daly stressed on Sunday that the US central bank should adopt a gradual approach to lowering borrowing costs, according to the Financial Times. Daly countered economists' concerns that the US economy is facing a sharp slowdown that would warrant rapid interest rate cuts.
Additionally, Federal Reserve Bank of Chicago President Austan Goolsbee cautioned that central bank officials should be careful not to maintain a restrictive policy longer than necessary. Although it's uncertain whether the Fed will cut interest rates next month, failing to do so could negatively impact the labor market, according to CNBC.
Additionally, the decline in the US yields contributes to downward pressure for the Greenback. 2-year and 10-year yields on US Treasury bonds stand at 4.05% and 3.85%, respectively, at the time of writing.
This week, all eyes will be on Federal Reserve Chair Jerome Powell's upcoming speech.
In a bottom line, the major technical graph for the US Dollar Index (DXY) indicates on possible huge decline for the next upcoming 12 to 18 months.
The secondary RSI(14) graph indicates also, the bearish sentiment prevails.
Over the past week, Gold spot (XAUUSD) has topped $2500 per ounce psychological high also, minting new all the history peak, while Forex Eur/Usd (EURUSD) pair just has flashed a positive 2024 YTD return, jumping above 1.10 psychological degree.
The US Dollar continues to weaken following dovish comments from Federal Reserve (Fed) officials, which have increased a new portion of expectations for an interest rate cut by the central bank in September. Furthermore, last week’s US economic data revealed that both the Producer Price Index (PPI) and Consumer Price Index (CPI) suggest that inflation is easing.
Federal Reserve Bank of San Francisco President Mary Daly stressed on Sunday that the US central bank should adopt a gradual approach to lowering borrowing costs, according to the Financial Times. Daly countered economists' concerns that the US economy is facing a sharp slowdown that would warrant rapid interest rate cuts.
Additionally, Federal Reserve Bank of Chicago President Austan Goolsbee cautioned that central bank officials should be careful not to maintain a restrictive policy longer than necessary. Although it's uncertain whether the Fed will cut interest rates next month, failing to do so could negatively impact the labor market, according to CNBC.
Additionally, the decline in the US yields contributes to downward pressure for the Greenback. 2-year and 10-year yields on US Treasury bonds stand at 4.05% and 3.85%, respectively, at the time of writing.
This week, all eyes will be on Federal Reserve Chair Jerome Powell's upcoming speech.
In a bottom line, the major technical graph for the US Dollar Index (DXY) indicates on possible huge decline for the next upcoming 12 to 18 months.
The secondary RSI(14) graph indicates also, the bearish sentiment prevails.
Trade active
August 23, 2024
Hasta la vista, baby, which means “Goodbye, baby” in Spanish.
👉 That’s the theme of Federal Reserve Chairman Jerome Powell’s remarks at the ongoing Jackson Hole Summer Symposium.
👉 Federal Reserve Chairman Jerome Powell laid the groundwork for future rate cuts on Friday, though he declined to provide specific guidance on the timing and size.
“Now is the time to adjust policy,” the central banker said in his highly anticipated keynote address at the Fed’s annual meeting in Jackson Hole, Wyoming.
“The direction is clear, and the timing and pace of rate cuts will depend on incoming data, evolving prospects, and the balance of risks.”
👉 As markets await guidance on the direction of monetary policy, Powell focused on looking back at what caused the inflation that led to an aggressive streak of 13 rate hikes in a row, sending the Fed’s key rate soaring an historically unprecedented 22 times in less than a year and a half, from March 2022 to July 2023.
👉 With inflation on the rise, Powell said the Fed can now equally focus on the other side of its dual mandate, namely ensuring that the economy remains at full employment.
“Inflation has subsided significantly. The labor market is no longer overheated, and conditions are now less tight than those that prevailed before the pandemic,” Powell said. “Supply constraints have normalized. And the balance of risks to our two mandates has shifted” (apparently toward a more balanced balance on both sides of the scale).
👉 Powell promised that “we will do everything in our power” to ensure that the labor market remains strong and that progress in the fight against inflation continues.
According to CME Group’s FedWatch, traders see a 100% chance of a rate cut of at least 1/4 percentage point by September and have raised the probability of a potential 1/2 percentage point cut to 25%.
👉 And while official inflation remains above 2 percent, the U.S. unemployment rate (UNRATE) has been slowly but steadily climbing higher and higher, most recently to 4.3%, as seen in a number of previous publications, triggering a historically-tested indicator of a U.S. recession.
In essence, it was a farewell speech from Chairman Powell, eager to turn the page on history and declaring that the mission that has focused on fighting inflation for the past two years has “been a success.”
👉 The US dollar index (DXY) has responded as expected by continuing the decline that has been emerging over the past month and a half, drilling down through its 52-week lows, while the currencies included in its basket, one after another, are respectively marking fresh 52-weeks highs.
Trade active
September 04, 2024
👉 Whether you believe in the further growth of the dollar globally or not, the world economy continues to choke and shrink even more without further devaluation of the "evergreen".
👉 Thus, NVIDIA (NVDA) shares fell by 9.5% on the eve of Tuesday, September 03, 2024, which reduced the company's valuation in just 1 trading session by a historically unprecedented $ 279 billion.
👉 By the way, before this, the record for daily losses belonged to Meta Platforms (META), when it lost $ 232 billion in market capitalization on February 3, 2022. But the "dark days" for Zuckerberg's brainchild did not end there, as the company lost another $400 billion in market cap over the next 9 months, falling by extra 60 percent by November 2022.
👉 Whether Nvidia's epic price swings will turn it into another meme stock or not - time will tell, but it is obvious that without The Greenback' devaluation, seismic activity in the US stock market will intensify rather than vice versa.
👉 On the technical side, the US dollar index (DXY) continues to consolidate below the previously broken 102 level, preparing for a further breakout of a hundred degree.
Trade active
September 17, 2024
👉 The Big Yikes Event is approaching financial markets, as the Fed is preparing to cut Interest rates for the first time in 5 years. It comes tomorrow, on Wednesday, September 18. The intrigue is fueled not so much by the imminent easing of the monetary policy, but what is the size of cut.
👉 The current consensus is a 63% probability (max. readings were as much as 67% probability) of a rate cut of 50 basis points at once (from the range of 5.25 - 5.50 to 4.75 - 5.00 respectively), which will obviously reduce the attractiveness of investments in the dollar and risk-free deposits.
👉 Historical time-tested machine says Fed is "acting" if probability of respective "acting" comes to 70% or above. In sum, history says Fed cut could be 25 basis points only.
👉 In any case the US dollar index (DXY) is hovering near 2-year lows, preparing to break below the 100 mark.
Trade active
September 24, 2024
👉 DXY Bears getting ready to drill out 200-weeks SMA, to roll the Greenback deep.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.