DXY Mid Term Analysis - Uptrend

10 mar

Since the beginning of January, the FED has been indicating that the pace of interest rate cuts throughout the year will depend on upcoming data. Additionally, by adopting a hawkish stance, it continues to temper the market's expectation of six interest rate cuts this year, as speculated in December, by signaling only four cuts. Most likely, we will see three or four cuts from the FED this year, with the first one probably occurring in May or June. The rate cuts are expected to be 25 basis points each.

Despite this hawkish stance, the mixed U.S. data in February managed to create an optimistic atmosphere in the market, successfully dampening the dollar. Although there is optimism, we believe that the data's mixed nature and the lack of a change in the FED's hawkish stance have not led to a significant shift. Our current view is that both fundamentally and technically, the dollar index is poised for an uptrend.

From a technical perspective, the main downtrend that has been in place since September 2022 appears to have ended. Particularly, the rebound of the price from the support levels before reaching the previous trend's low level on December 28 supports this view.

Moreover, the doji candlestick formed on the D1 chart on March 8 also signals a reversal in price. Our initial target is the breakout of the main downtrend line. Upon the breakout of this trend line, we anticipate a rise up to the Fibonacci 50% retracement level, which was the previous intra-trend peak. If this level is surpassed, our next target will be the 61.8% Fibonacci retracement level.

13 mar

Uwaga

Yesterday, following inflation data that exceeded expectations, DXY initiated an upward movement but is now experiencing a corrective decline post-data.

Technically, despite not yet breaking the rising support, the price has seen the 50-hour (green) moving average cross above the slower 100-hour (blue) moving average, and the price has not yet broken below this moving averages zone. This suggests that the correction may soon end, indicating a possible continuation of the upward movement.

In the event of a downward break of the rising support (red), our initial support level will be the Fibonacci retracement level of 61.8%.

13 mar

Uwaga

The 30-Year Bond Auction showed a decrease in the interest rate compared to the previous rate, causing the DXY to break its rising support and retract to the second support level, which is the Fibonacci 61.8% level. From this level, the dollar index, which faced strong resistance, seems to have started an upward movement.

If the U.S. unemployment, retail sales and PPI data to be announced tomorrow do not create unexpected volatility, we may see that the correction in the DXY has ended and the rise has begun.

14 mar

Uwaga

The movement we've been waiting for four days started sharply today with the U.S. PPI data coming in higher than expected.

The dollar rose to its first major resistance level, the Fibonacci 38.2% level, and is currently facing resistance at this level. The value losses of dollar pairs against the dollar have also approached significant pivot levels, and the RSI indicators in short time frames have reached extreme regions.

Before we see a continuation of the dollar's strength, we might observe lateral movements or partial retractions for a correction in dollar pairs. We recommend doing some trade closing and profit taking in your dollar purchase transactions.

We will monitor whether the correction movement has started and update our analysis accordingly.

15 mar

Uwaga

The DXY broke the 38.2% main resistance and started a corrective movement, facing resistance from the 100-period simple moving average on the 4-hour chart.

Currently, the broken 38.2% resistance is being used as support. If this support is breached, there could be a corrective decline down to the 103.10-103 range, where the 1-hour and 4-hour charts intersect.

Before making a new transaction, it would be a safe option to monitor whether the price will break the 38.2% Fibonacci support.

19 mar

Uwaga

DXY rose to the first main resistance at 61.8% without any correction. We are monitoring the price movement to observe the impact of the 61.8% resistance on the price. Before adding new trades in dollar pairs, we need to see whether there will be a correction in DXY or if it will continue without correction by assessing how much pressure the 61.8% resistance exerts on the price.

20 mar

Uwaga

The expected pullback began following the FOMC press conference. If the price rebounds from the 38.2% support, it could form an inverse head and shoulders pattern. Powell's remarks and the dot plots aligned with market expectations, signaling three rate cuts this year, with the first in June. This led to profit-taking and the anticipated correction in the market.

Despite the Fed's dovish stance, we saw three FED presidents revise their votes upwards in the dot plots. We also observe an increase in the end-of-year interest rate expectations and the expected interest rate for 2025. Based on the minutes, we believe the dollar's easing will be limited to the technical pullback we anticipated. We will monitor whether any further pullback in the price aligns with the correction levels.

26 mar

Uwaga

We may witness one last corrective decline before the price, facing resistance from the main trendline, breaks through the trendline and commences a primary uptrend. Until the Initial Jobless Claims data released on Thursday, a relatively calm descent might be observed, and activity could pick up with the data. With the Core PCE data set to be announced on Friday, we anticipate the trendline will be broken upwards, leading to a sharp rise.