USD fundamental & wave analysis
This forecast idea emerged a year ago. The chart was draw at the same time.
Fundamentals:
Central Bank monetary policy changes are the main drivers of currency trending moves.
— in 2014 US dollar entered a cycle of rate hikes when FED announced its policy changes: shrinking its bond purchasing program followed by possible rate hikes in 2015.
— USD reacted swiftly rising 25% before 1st planned rate hike from long series of gradual rate hikes were executed.
— rate hike cycle ended in December 2018
Assumption: no more rate hikes are expected thus no reason for USD to rise as a main trend.
Conclusion: the only possible FED policy that can be expected with high probability is quantitative easing (QE), expansion of asset purchase program and rate cuts; thus USD future weakness is assumed.
***
— in 2019 FED cut its rate a few times making slight adjustments and stating that it's not a start of a new rate cut cycle.
— in 2020 COVID-19 crisis emerged. FED responded with huge rate cuts, which brought rate to 0% in line with ECB interest rate, in effort to boost the economy.
USD has been deprived from its value in carry trades (a healthy margin between central banks exchange rates disappeared).
Conclusion: USD is expected to fall.
***
Technical analysis:
Red ABC flat pattern roughly represents the rate change cycle which starts from point when further rate cuts were either certain or barely expected, and ends when future rate hikes were certainly determined and already represented in USD price.
wave C equals to 161.8% of wave A.
green wave 3 represents the announced change in FED's monetary policy. this announcement was the main driver in surging of US dollar.
now blue abc pattern is unfolding.
it's expected to be similar to red ABC pattern. waves A and B are almost equal in time to waves a and b.
fibo time trend extension shows the projection of red wave C (only waves 1-2-3 green, as wave 5 had relatively little impact on USD) to blue wave c.
blue wave b is considered to be completed (a year ago it wasn't considered so).
***
Forecast: USD is expected to fall to 78.07 in next 2-3.5 years (additional 19% drop). Sell targets are: 78.07 and 87.59 (based on blue wave "a" fibo extension).
until there is no new pivotal changes in FED policy, forecast stands.
Fundamentals:
Central Bank monetary policy changes are the main drivers of currency trending moves.
— in 2014 US dollar entered a cycle of rate hikes when FED announced its policy changes: shrinking its bond purchasing program followed by possible rate hikes in 2015.
— USD reacted swiftly rising 25% before 1st planned rate hike from long series of gradual rate hikes were executed.
— rate hike cycle ended in December 2018
Assumption: no more rate hikes are expected thus no reason for USD to rise as a main trend.
Conclusion: the only possible FED policy that can be expected with high probability is quantitative easing (QE), expansion of asset purchase program and rate cuts; thus USD future weakness is assumed.
***
— in 2019 FED cut its rate a few times making slight adjustments and stating that it's not a start of a new rate cut cycle.
— in 2020 COVID-19 crisis emerged. FED responded with huge rate cuts, which brought rate to 0% in line with ECB interest rate, in effort to boost the economy.
USD has been deprived from its value in carry trades (a healthy margin between central banks exchange rates disappeared).
Conclusion: USD is expected to fall.
***
Technical analysis:
Red ABC flat pattern roughly represents the rate change cycle which starts from point when further rate cuts were either certain or barely expected, and ends when future rate hikes were certainly determined and already represented in USD price.
wave C equals to 161.8% of wave A.
green wave 3 represents the announced change in FED's monetary policy. this announcement was the main driver in surging of US dollar.
now blue abc pattern is unfolding.
it's expected to be similar to red ABC pattern. waves A and B are almost equal in time to waves a and b.
fibo time trend extension shows the projection of red wave C (only waves 1-2-3 green, as wave 5 had relatively little impact on USD) to blue wave c.
blue wave b is considered to be completed (a year ago it wasn't considered so).
***
Forecast: USD is expected to fall to 78.07 in next 2-3.5 years (additional 19% drop). Sell targets are: 78.07 and 87.59 (based on blue wave "a" fibo extension).
until there is no new pivotal changes in FED policy, forecast stands.
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