DXY - 4H Dollar Index more FallTechnical Perspective:
TVC:DXY experienced two significant bullish legs in October and November on the daily time frame. However, the index started to fall sharply at the end of November, and this bearish momentum remains strong.
On the 4H chart, DXY reached a key resistance zone and faced a significant rejection with notable bearish momentum, signaling the continuation of the downtrend.
The current movement indicates a high likelihood of further declines, potentially to the bottom of the trading range. Many USD pairs are at critical support or resistance levels, and expected reactions from these zones could amplify downward pressure on the DXY, making it increasingly vulnerable to a substantial fall.
Fundamental Perspective:
In December 2024, the bearish sentiment surrounding the DXY is driven by key fundamental factors. The Federal Reserve is anticipated to implement another 25 basis point interest rate cut during its December 18 meeting, following earlier cuts in September and November. This dovish policy reflects the Fed’s commitment to supporting economic growth amidst a slightly cooling labor market and growing global uncertainties.
Adding to the pressure, inflation data showed a 2.7% year-over-year increase in November, a slight uptick from 2.6% in October. Despite this, the Fed remains focused on easing monetary conditions to mitigate recession risks. Additionally, the recent U.S. presidential election has raised prospects of fiscal policy changes, including proposed tax cuts and potential tariff adjustments, which contribute to market uncertainty and weigh on the dollar.
These fundamental shifts align with the bearish technical setup, suggesting that the DXY’s downtrend is likely to persist in the near term. Keep an eye on upcoming Fed announcements and inflation data for further confirmation of this trajectory.
