Greenback Rising on Tuesday
The DXY is seeing better demand today with the index attempting to recover following Friday’s crash. However, price still remains firmly down from pre-NFP levels and at risk of a further drop lower if we see any fresh US data disappointments this week. On the back of the shock NFP-decline we saw last week, the market’s outlook on the Fed has turned more dovish with the CME group now pricing a near 90% chance of a cut next month along with rising expectations of a further cut by year end.
Bearish USD Risks
Against this dovish backdrop, USD looks vulnerable to further downside ahead of the September FOMC. Fluctuations, like we’re seeing today, hold little promise of developing into a fuller recovery and any fresh data weakness should offer opportunities for shorts to reload. Looking ahead today, the ISM services PMI will be closely watched and should we see any downside in that reading we’re highly likely to return to lows. Traders will also be keeping an eye on incoming Fed commentary with any dovish signalling set to add to fresh downside pressure too.
Technical Views
DXY
For now, DXY remains in a shallow corrective channel which can be viewed as a bear flag, suggesting the potential for a fresh breakdown. For now, the 100 mark remains the key resistance to watch with 98 (and the channel lows) the key support to note. A break of either boundary will inform the next phase of price action.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.