Dollar Strength-Mid September Outlook
Updated
Hello Traders,
As of right now, this is my outlook and potential targets on the Dollar Index. The equity market beginning to weaken during August/September and dollar gaining strength is cyclical to the transition from q3 to q4. Which beginning in October, DXY typically will lose strength, while the equity market regains strength from September weakness. I expect
DXY to continue to rise until the end of the month and possibly consolidate for a few days at the highs before we start seeing bearish movement.
COT Analysis:
Commercials have added even more short positions and are still overall net SHORT. However, long positions have been added by leveraged funds and the commercials, which makes sense that they're in a sell program even with temporary dollar strength.
Technical Analysis: August is currently sitting as the nearest intermediate high where we can either go to retest the OB then fall down, or we can completely take out August's high, tap into the monthly OB which is at 93.800 then fall. If 93.800 is broken, then reanalysis will be given. Why is the dollar gaining strength? Seasonal tendency & It failed to take out its nearest intermediate lows. Before shifting to a bearish market structure, liquidity will have to be accumulated as short positions are added by commercials during the temporary strength. 93.600s line up with 85-93% retracement levels, as well as a 70% extension from the intraday current high and low.
Bullish Fundamental Catalyst:
1. Fed: Rumors of easing asset purchases, rate hikes, tapering talks, powell does not get reappointed
2. Economic Recovery: lower inflation figures, GDP growth, healthy labor market, strong demand for treasury, consumer spending. ( higher cpi figures)
3. Monetary Policy: cash shortage if ceiling is not raised, US default, deflationary shock, increased capital earning taxes, global supply chain disruptions with companies not being able to have enough supply to meet customer demand.
Bearish Fundamental Catalyst:
1. Fed: halting tapering process to wait for more data on economic recovery, powell gets reappointment next year, increased stimulus/asset purchasing, fed increasing inflation targets to 3-3.5%.
2. Slow down of economic recovery (lower cpi figures), decline in fixed income with a rise in equity market, and increased inflation figures.
3. Monetary Policy: increase to debt ceiling, 3.5 trillion spending package gets approved, any other government spending increases.
4. Delta variant cases begin to grow, travel restrictions and lockdown increases.
GLGT :)
As of right now, this is my outlook and potential targets on the Dollar Index. The equity market beginning to weaken during August/September and dollar gaining strength is cyclical to the transition from q3 to q4. Which beginning in October, DXY typically will lose strength, while the equity market regains strength from September weakness. I expect
DXY to continue to rise until the end of the month and possibly consolidate for a few days at the highs before we start seeing bearish movement. COT Analysis:
Commercials have added even more short positions and are still overall net SHORT. However, long positions have been added by leveraged funds and the commercials, which makes sense that they're in a sell program even with temporary dollar strength.
Technical Analysis: August is currently sitting as the nearest intermediate high where we can either go to retest the OB then fall down, or we can completely take out August's high, tap into the monthly OB which is at 93.800 then fall. If 93.800 is broken, then reanalysis will be given. Why is the dollar gaining strength? Seasonal tendency & It failed to take out its nearest intermediate lows. Before shifting to a bearish market structure, liquidity will have to be accumulated as short positions are added by commercials during the temporary strength. 93.600s line up with 85-93% retracement levels, as well as a 70% extension from the intraday current high and low.
Bullish Fundamental Catalyst:
1. Fed: Rumors of easing asset purchases, rate hikes, tapering talks, powell does not get reappointed
2. Economic Recovery: lower inflation figures, GDP growth, healthy labor market, strong demand for treasury, consumer spending. ( higher cpi figures)
3. Monetary Policy: cash shortage if ceiling is not raised, US default, deflationary shock, increased capital earning taxes, global supply chain disruptions with companies not being able to have enough supply to meet customer demand.
Bearish Fundamental Catalyst:
1. Fed: halting tapering process to wait for more data on economic recovery, powell gets reappointment next year, increased stimulus/asset purchasing, fed increasing inflation targets to 3-3.5%.
2. Slow down of economic recovery (lower cpi figures), decline in fixed income with a rise in equity market, and increased inflation figures.
3. Monetary Policy: increase to debt ceiling, 3.5 trillion spending package gets approved, any other government spending increases.
4. Delta variant cases begin to grow, travel restrictions and lockdown increases.
GLGT :)
Trade active
beautiful transition by the market this week into gaining dollar strength with weakness of the equity market :) analyzed, predicted, planned, and executed.Trade active
yikes equities.. ;)Trade closed: target reached
boom. fomc covered every single topic listed here. pinpoint accuracyTrade closed: target reached
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