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Dollar Index ($DXY): Technical Analysis$DollarIndex could trigger a 3 or 5 wave swing on daily chart, and if this happens, the first Target should be around 106/107 area. That said, the trend remains bullish and the index should be bought on any correction. The technical structure on intraday chart is also very interesting, and it might be useful to develop it in our updates below as well. FUNDAMENTAL ANALYSIS (Click & Play on Chart below) Trade with care! 🚀 Like if my analysis is useful. Cheers!
TVC:DXYLong
by TheAnonymousBanker
4
When the Dollar Breaks This Supply Zone, It Will Bring Pain!With the stock market already trading near the 2031 fair value target of $434.98, it's a wonder how far out investors are willing to bet on S&P 500 earnings. Apple and Meta found some resistance near their average analyst targets, and now we have to figure out what comes next. For me I see t least a 50% retracement for the S&P 500, which sits around $412 per share. A strong dollar and other potential catalysts from the economic landscape could also lead to SPY falling lower. I have a fair value range between $370 and $400. Take a listen to the Equity Channel Podcast on Apple, Amazon and Spotify for more information on trading and investing.
TVC:DXYLong
by D1Finance
DXY and the Dollar TrapIn global finance, everything is relative. For now, there is no good answer to the perennial question: If not for the US dollar, then what? That is why, despite all its flaws, the dollar remains the ultimate haven currency. And the US Dollar Index (“DXY”) measures the performance of the US Dollar against a basket of six major currencies of USA’s major trading partners. The DXY measures USD performance against currency majors. Euro, Japanese Yen, and the British Pound represent more than 80% of aggregate weight. Intriguingly, the absence of emerging majors such as the Chinese Yuan (CNY) and the Australian Dollar (AUD), stands out. The DXY will likely be modified in the future to reflect shifting global dynamics. History of the DXY The DXY was first created in 1973 after the establishment of the Bretton Woods agreement which abandoned the gold standard. The index has since been modified just once when the Euro was established as the official currency of the EU. The DXY commenced with a value of 100 in 1973. The Index above 100 signals that USD is stronger than the basket compared to 1973 values. Meanwhile an index below 100 points to a weak dollar. The current DXY value of 104 indicates that the USD is 4% above the value of the basket relative to its value in 1973. During periods of major global financial upheavals, the DXY tends to drift away from 100. In the 1980s as the Fed hiked rates aggressively, the dollar’s value soared. Eventually, the dollar was intentionally weakened in an historical agreement known as the Plaza Accord. Why would the US weaken its own currency? In short, a strong currency is not always a good thing. A strong dollar made US goods less viable in global markets and led to a sharp increase in the US trade deficit. As such, weakening the dollar was in the best interests of not just US’s trading partners but also the US. Another period of upheaval for the DXY was the 2008 global financial crisis. The USD was in crisis when Lehman Brothers collapsed amid the US housing crisis. The confidence in the dollar was shaken. Comparatively, other countries were less severely affected. This pushed the DXY to its lowest level of 71. Excluding these exceptional periods of time, the DXY trades around its base value. Movements in DXY are at times drive by policy changes in the US or its partner countries such as Japan, EU, UK, Canada, Switzerland, and Sweden. The real elephant in the room is the Fed policy. Fed decisions have an outsized effect on the DXY. The DXY is not very volatile. Its 30-day annualized rolling volatility ranges between 5 and 10. However, major economic events can lead to a rise in volatility. Volatility spikes during periods of global crises or major events in the US (Fed Hikes) or EU (EU Debt Crisis) with both currencies having major weightage in the index. DXY CORRELATION WITH OTHER ASSET CLASSES Fed Funds Rate Although not tightly correlated, Fed Funds rate has a major impact on the DXY. Higher rates make the dollar more attractive which leads to it strengthening. However, as other major central banks usually move in tandem with the Fed, rates in the partner countries also rise dampening the buoyancy in DXY. Fed policy action has a major impact on the DXY at the beginning of shifts in policy. However, this effect soon fades as markets price in terminal rates according to expectations. Fed & ECB Policy Divergence The divergence of policy between ECB and Fed has a major impact on the DXY. As policies start to diverge (correlation between rates starts to decline), DXY experiences large directional moves. 2Y Treasury Yields As treasury yields are derived from Fed Funds rate, the correlation between DXY and 2Y constant maturity treasury notes is similar. In general, both are positively correlated. The correlation breaks during periods where rates grind lower, but the USD continues to rise. Case in point is the experience of 2020. When the US Fed drove rates to zero, the US dollar soared as the only credible haven. This is the classic dollar trap. Furthermore, DXY and treasury yield correlation can break due to effects of economic policy action. For instance, in 2018, DXY remained muted despite rising treasury yields as markets were confident of the terminal rate and the Fed not hiking rates very aggressively. FOMC MEETINGS AND THE DOLLAR INDEX FOMC meetings decide the fate of interest rates. Typically, decisions move in tandem with expectations. But when FOMC decisions diverge from consensus, impact on the DXY can be large. For instance, in its May 2023 meeting, markets anticipated the Fed to pause its aggressive hiking campaign against a backdrop of regional banking crisis. However, Fed mercilessly cranked up another 25bps driving DXY higher. WHAT’S UP AT THE NEXT FOMC MEETING? CME FedWatch tool highlights the probability of changes in FOMC rate as measured by 30-day Fed Fund futures pricing data. For the next FOMC meeting on the 14th of June, CME FedWatch tool points to an 80% probability of no hike. For the meeting on 26th July, markets are pricing a 55% probability of a 25bps hike. This would take rates to 5.25%-5.5% which is expected to be the terminal rate. In case Fed decides to hike in the June meeting, it could lead to a sharper upward move in the DXY. COMMITMENT OF TRADERS REPORT The Commitment of Traders report shows weekly changes in open interest by investor category. Institutional investors expect DXY to move higher as both managed money and small speculators have increased their net long positioning over the last three weeks. TRADE SETUP Market expectations have moved wildly from rate hike to no hike multiple times over the past two weeks. Cooling inflation in April, signs of a weakening job market, anemic services data, credit tightening are shaping market consensus for a rate pause in June. However, if May inflation data, which is due a day before the FOMC meeting paints a different picture or the job market continues to remain strong, the Fed may throw in another rate hike. Anticipating Fed move is difficult. Investors deploying a long straddle can potentially lock in gains from large moves in DXY if FOMC moves against consensus. A long straddle is a delta-neutral options strategy that can be used to benefit from rising volatility in options. It involves simultaneously going long call and long put at the same delta. Delta-neutral makes the structure directionally agnostic to upside or downside moves. Loss on one leg will be offset by gains from the other leg when the underlying moves sharply. Straddles are powerful in that they are long Vega which makes it gain not only from a directional move but also from volatility expansion. With uncertainty looming around Fed outcomes, volatility will likely spike heading into the meeting. A delta neutral strategy would be difficult to run directly on DXY futures due to slim liquidity for these options on ICE. As such, investors could consider long straddles in CME Euro FX options, CME Japanese Yen options, and CME GBP options to obtain similar exposure. These three majors represent 83% of the DXY and largely drive major moves in the DXY. The above charts show the payoff for the straddle on each of these individual options. ATM strikes can provide higher profit potential with higher risk potential. However, ~25 delta options have cheaper premium due to which the loss is limited at a lower level, consequently, 25 delta straddle would also require a larger price movement before the position is in the money. Moreover, the profit potential on these would also be lower due to wider strike levels. A notable exception to these is the Japanese Yen put options which have noticeably lower IVs and are thus cheaper. Each of these pairs would have to move ~1.5% over the next two weeks for the position to make money. DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
TVC:DXY
by mintdotfinance
1
DXY Analysis - 6 JuneSave time. Technical Analysis in just a few words. Daily Timeframe. DXY is currently found in a correction. Long term direction: Short If price goes under the marked price level, there is a high chance for the Wave 5 to continue to form on the downside. That's it. Have a nice day! DISCLAIMER: The ideas shared in this context are strictly for educational purposes and should not be considered as financial or legal advice. Each individual bears full responsibility for their own trades and decisions.
CAPITALCOM:DXY
by YExplore
Surrender Bears! Accumulation above 26,747 ? 📽️Timeframes are closing above Weekly Zone 26,770. Unless during the next 22 hours we see a 1.22% dump below our weekly level , I'm Looking up from here. Price has returned into our range from the second half of May between Daily Zone 27,400$ and 26,747$ Weekly Zone. Price printed a solid Bull candle rejecting our Weekly level which was anticipated. Price consolidated and dropped slightly during yesterday's daily candle. We haven't started dumping and price has been consolidating along the Highs of our Daily range from the Second half of Month May. The Highs during the Second half of May being 27,400$. As the New week begins I am looking for an Increase in Bitcoin as the debt ceiling controversy ends and the Summer begins. 29,246 Weekly Level is our target for the 1st half of June. Safe Trading.
COINBASE:BTCUSDLong
by ShrewdCatfx
GOLD FUNDAMENTAL ANALYSISAmid the looming US debt deadline, recent developments have triggered a turn towards gold as an instrument of risk hedge. Investors are closely examining the potential impact of a US debt ceiling agreement and its implications for federal spending. "Fitch moved the US sovereign rating on a watch negative radar as debt deadline looms. Investors are also assessing the possible impact of a US debt ceiling deal and how it could cut federal spending" says Ehsan Khoman, Head of Commodities, ESG and Emerging Markets Research at MUFG. Gold is being eyed as a promising refuge in the light of certain economic conditions. Khoman adds, "This had pushed investors towards gold, as a hedge against risk." The complexity of the current financial environment has particularly strengthened gold's attractiveness. Gold Outperforming in a Challenging Economic Environment While the Federal Reserve persists in tightening despite the rise in producer prices, money supply, and bank deposits, gold has emerged as a shining performer. Khoman mentions, "The unprecedented combination of the Fed still tightening in H1 2023 despite elevated producer prices, money supply and bank deposits, favour gold." The precious metal has outdone other constituents of the Bloomberg Commodity index on an annualised basis. According to the analyst, gold's beneficial position is likely to persist as the world navigates beyond the Federal Reserve's hawkishness. "Gold’s value proposition remains constructive as we are moving past Fed hawkishness since the US is seemingly slowing without derailing growth elsewhere," says Khoman. This economic slowdown could spur increased investment demand for gold, which has been relatively dormant in recent years. Emerging Market Central Banks Keep the Demand for Gold High Central banks in emerging markets (EM) are actively acquiring gold, a trend that has kept the demand for the precious metal robust. This purchasing pace is driven by geopolitical risks and de-dollarisation trends. "EM central banks continue to purchase gold at pace – a trend that we expect to continue to dominate gold demand on the back of elevated geopolitical risks and de-dollarisation trends," Khoman explains. Amid these forces, the trajectory for gold prices is set to rise, albeit at a potentially slower pace than seen previously. The analyst further states, "Overall, this suggests gold is poised to move higher, although it may be more of a slow grind than continued spike." MUFG's gold price models project an average of USD1,980 per ounce this year, with a tendency for the price to exceed this prediction. Khoman suggests, "Our gold price models signal an average of USD1,980/oz this year, with risks skewed to the upside." The gold analyst concludes that in a climate of increasing anxiety and looming recession risks, the potential downside for gold under a soft landing or further hawkish moves from the Fed is significantly less than the upside in the event of a growth shock pushing the US economy into recession. However, it might be challenging for gold to cross the USD2,100 per ounce threshold without the Fed resorting to rate cuts in response to a recession that necessitates pivoting towards growth support.
OANDA:XAUUSDLong
by thunderpips
Forex Gods 🧞 Dare to Continue Eurusd? Well.. entering the final london session of the week here. I'd be a fool to change up on my analysis. What I have projected thus far this week has occurred exactly as I had anticipated. Would I be foolish to give up on this and outsmart my original idea so to speak. I don't want to play myself. When you stick around in the markets long enough, you begin to see things occur over and over again. Those who know, understand. It's not complicated though and it's actually pretty straightforward. When you mix an attachment to money in there, well no sh*t it is tied to our survival in the modern age. Well that's when things get complicated. Otherwise, I'm simply drawing lines and articulating what's unknown to me at this present time. I've done it long enough now to the point in which I am quite confident either way. Most of the time price bounces at my levels and so for the rest of time I will have the ability to create attractive Risk/Reward ideas. What a privilege. The difficult part is sticking around long enough to gain another perspective. I've seen many come and go and I feel lonely at times. I suppose that so long as I can draw my accurate level's/zones on the charts, the gods will have a place for me. Just as the gods do for all of us.
Long
by ShrewdCatfx
DEATH OF THE DOLLARDear Friend,    “Wake up you guys. If you're saving US dollars, you're like the skipper on the titanic. You know they're going to have to print more and more and more and more all the time… This makes savers the biggest losers on planet earth.”   But here is what is fascinating… I know you will agree.   As the dollar gets weaker and weaker, Bitcoin and cryptocurrencies are getting stronger and stronger.    I’m going to say that again because it is so important. As the dollar gets weaker and weaker, Bitcoin and cryptocurrencies are getting stronger and stronger.    The giant hedge funds and investing firms are slowing their purchase of dollars and U.S. bonds...   They are now using their profits to buy cryptocurrencies.   The Wallstreet Journal reports that mainstream hedge funds are pouring BILLIONS of dollars into crypto. They go on to say that world famous traders including Alan Howard and Paul Tudor Jones are said to be increasing their trading in cryptocurrencies.If you want to become a successful investor, extra cash to pay off your debt, enjoy extra time with your loved ones, live your dream life…   Thank you for taking the time to read my letter,
TVC:DXY
by mehdi_kb
2
Eurusd Longs " Where art thou ? " 🔭As Bank Holiday Trading comes to a close, we can observe another Bearish Daily candle. The Eur is weak through the holiday trading and the U.S dollar advance is yet to give in. The dollar index is a little bit better than B.E. on the day. For Eurusd : - Watch 1.07116 4Hr Support zone closely. A Strong 4Hr candle closure rejecting this level may send us quickly back up to 4Hr resistance Zone 1.074 and next we may retest our most recent Daily Level ( Daily S/R Zone 1.076 ) - A touch into our 1.0665 Weekly Zone In my opinion is very likely and will coincide with the 6 Red folder news releases we have this week. - We have alot of news this week and we must be aware during our trading - Bull targets for the week include 1.08125 Daily Resistance Level - Bear Targets for this week include a touch into 1.06245 Daily Support Level No trading today since it is a bank holiday. Less opportunity in a low volume market. At least when it comes to the parameters of my trading plan. Safe Trading.
Short
by ShrewdCatfx
DOLLAR INDEX - FUNDAMENTAL ANALYSISPosition for dollar weakness. While some top Fed officials have recently sounded more hawkish and data has been relatively strong, we believe the Fed is still closer to pausing rate hikes than other central banks, including the European Central Bank, which looks set to continue tightening. We expect the US dollar to weaken further this year as the US interest rate and growth premiums erode. The Fed is also likely to cut rates sooner than other major central banks, in our view. We advise investors to hedge their long USD exposure. In our global foreign exchange strategy, we maintain a preference for the Australian dollar and Japanese yen, and see relative value in the euro, Swiss franc, and British pound. A weakening dollar should also support gold, which we forecast will rise to USD 2,250/oz by June 2024.
TVC:DXYShort
by thunderpips
2
Jobs Data 🏗️ / Weekly Level 1.06643 Eurusd Jobs Data was expected to ease over the prior period as the U.S. may have had a smaller amount of job opportunties for it's citizens during the month of May. It turns that the U.S. had more about 160,000 more job openings than was expected. So this is positive for a few reasons - Data was expected to ease over the prior period but we didn't ease and instead the U.S. gained job opportunities during May. - Data was better than expected by a significant margin when compared to previous job openings data releases. This is Optimistic for the U.S. Economy. The impact of the News on price action has initially gone down and dropped from our 4Hr S/R level at 1.07018 Moving Forward I anticipate consolidation or a retracement in price while we hold above 1.06643. If we continue our descent and USD news turns out to be strong enough, our next target is 1.06235. After that, and with NFP data on friday, we may continue to drop to 1.05435. I took a buy at our weekly level 1.0665 when price creased the initial low created during the first 1 minute of news. I have since been stopped out by a small margin before price retraced in my anticipated direction but would take the trade once more given the chance. Weekly Level's are quite strong area's on the chart. Stronger than Daily Level's! They Hold quite frequently as we can observe from the trading earlier in the day. 2 Hours after London open was when we initially tapped into 1.06643 Weekly Level. It coincided with the new 4Hr candle and explains why you can observe no bottom wick on the previous 4Hr candle. Big Players trading on the Higher timeframes are supporting a demand area here. As a scalper I have them to help with my intra-day activities.
by ShrewdCatfx
2
EUR USD - FUNDAMENTAL ANALYSISThe recent drop in inflation rates in Germany, France, and Spain have triggered speculation about a softer eurozone flash CPI figure, suggests Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE at ING Bank. This comes as the market consensus expects the headline to fall to 6.3% year-on-year from 7.0%, with the core slipping to 5.5% from 5.6%. Inflation Drops Fuel Euro Speculation "A faster fall in eurozone inflation than in the US would confound a market that had been betting that the greater weight of assets in US inflation would bring that measure lower faster than in the eurozone," says Turner. This observation underlines the potential repercussions of the current economic scenario on the dynamics of the EUR/USD exchange rate. Turner further observes that the softer European inflation this week has also seen eurozone swap rates drop relative to those in the US. "Eurozone swap rates drop relative to those in the US," he adds. This trend further illustrates the shift in the investment landscape due to the current inflation dynamics. Turner underscores that the two-year EURUSD swap differential has now returned to levels seen in March, putting further weight on the EUR/USD. EUR/USD Performance Delving into short-term predictions, barring any substantial surprises in the eurozone CPI data, the Euro to Dollar exchange rate is likely to outline a range of 1.0650-1.0720, in what Turner refers to as a "holding pattern ahead of tomorrow's NFP data." Despite this, the strategist believes that this area should provide a strong base for the pair during the summer months. "We reiterate that this 1.05/1.07 area should prove a base for EUR/USD this summer," Turner mentions. He substantiates this by pointing out that the current conditions are not nearly as severe as those that pushed the EUR/USD much lower in the same period last year.
Long
by thunderpips
GOLD FUNDAMENTAL ANALYSISAmid the looming US debt deadline, recent developments have triggered a turn towards gold as an instrument of risk hedge. Investors are closely examining the potential impact of a US debt ceiling agreement and its implications for federal spending. "Fitch moved the US sovereign rating on a watch negative radar as debt deadline looms. Investors are also assessing the possible impact of a US debt ceiling deal and how it could cut federal spending" says Ehsan Khoman, Head of Commodities, ESG and Emerging Markets Research at MUFG. Gold is being eyed as a promising refuge in the light of certain economic conditions. Khoman adds, "This had pushed investors towards gold, as a hedge against risk." The complexity of the current financial environment has particularly strengthened gold's attractiveness. Gold Outperforming in a Challenging Economic Environment While the Federal Reserve persists in tightening despite the rise in producer prices, money supply, and bank deposits, gold has emerged as a shining performer. Khoman mentions, "The unprecedented combination of the Fed still tightening in H1 2023 despite elevated producer prices, money supply and bank deposits, favour gold." The precious metal has outdone other constituents of the Bloomberg Commodity index on an annualised basis. According to the analyst, gold's beneficial position is likely to persist as the world navigates beyond the Federal Reserve's hawkishness. "Gold’s value proposition remains constructive as we are moving past Fed hawkishness since the US is seemingly slowing without derailing growth elsewhere," says Khoman. This economic slowdown could spur increased investment demand for gold, which has been relatively dormant in recent years. Emerging Market Central Banks Keep the Demand for Gold High Central banks in emerging markets (EM) are actively acquiring gold, a trend that has kept the demand for the precious metal robust. This purchasing pace is driven by geopolitical risks and de-dollarisation trends. "EM central banks continue to purchase gold at pace – a trend that we expect to continue to dominate gold demand on the back of elevated geopolitical risks and de-dollarisation trends," Khoman explains. Amid these forces, the trajectory for gold prices is set to rise, albeit at a potentially slower pace than seen previously. The analyst further states, "Overall, this suggests gold is poised to move higher, although it may be more of a slow grind than continued spike." MUFG's gold price models project an average of USD1,980 per ounce this year, with a tendency for the price to exceed this prediction. Khoman suggests, "Our gold price models signal an average of USD1,980/oz this year, with risks skewed to the upside." The gold analyst concludes that in a climate of increasing anxiety and looming recession risks, the potential downside for gold under a soft landing or further hawkish moves from the Fed is significantly less than the upside in the event of a growth shock pushing the US economy into recession. However, it might be challenging for gold to cross the USD2,100 per ounce threshold without the Fed resorting to rate cuts in response to a recession that necessitates pivoting towards growth support.
OANDA:XAUUSDLong
by thunderpips