Will ongoing risk-on theme keep dampening the US dollar further?
Macro theme:
- On Tue, PBoC surprised investors with a new set of support measures that positively impact risky assets. This unexpected move has injected a fresh wave of optimism into the markets.
-In contrast, the latest data from the US revealed a surprising decline in consumer confidence, which fell to 98.7 this month from a revised 105.6 in Aug. This marked the most significant drop since Aug 2021, sparking concerns about the health of the US economy.
- As a result, market expectations for another 0.5% rate cut by the Fed at its Nov meeting have increased significantly. According to CME Group's FedWatch Tool, the probability of such a move jumped to 60.7% from 53% just a day earlier. This shift towards a more dovish monetary policy stance has further weakened the US dollar as investors become more risk-tolerant.
Technical theme:
- On the 4-hour chart, DXY broke its support area of 100.55-100.60 and confirmed its downward movement. The price is trading below both EMAs by a fair distance, and there is a risk of a potential mean reversion if it tests a strong psychological level, such as 100.00, ahead.
- If DXY extends its decline, it may retest and find psychological support around 100.00, confluence with its descending channel's lower bound.
- Meanwhile, DXY may recover to fill its gap and retest the broken area around 100.55-100.60 before resuming its downward movement.
Analysis by: Dat Tong, Senior Financial Markets Strategist at Exness
- On Tue, PBoC surprised investors with a new set of support measures that positively impact risky assets. This unexpected move has injected a fresh wave of optimism into the markets.
-In contrast, the latest data from the US revealed a surprising decline in consumer confidence, which fell to 98.7 this month from a revised 105.6 in Aug. This marked the most significant drop since Aug 2021, sparking concerns about the health of the US economy.
- As a result, market expectations for another 0.5% rate cut by the Fed at its Nov meeting have increased significantly. According to CME Group's FedWatch Tool, the probability of such a move jumped to 60.7% from 53% just a day earlier. This shift towards a more dovish monetary policy stance has further weakened the US dollar as investors become more risk-tolerant.
Technical theme:
- On the 4-hour chart, DXY broke its support area of 100.55-100.60 and confirmed its downward movement. The price is trading below both EMAs by a fair distance, and there is a risk of a potential mean reversion if it tests a strong psychological level, such as 100.00, ahead.
- If DXY extends its decline, it may retest and find psychological support around 100.00, confluence with its descending channel's lower bound.
- Meanwhile, DXY may recover to fill its gap and retest the broken area around 100.55-100.60 before resuming its downward movement.
Analysis by: Dat Tong, Senior Financial Markets Strategist at Exness
Note
Market made a low around 100.18 for 3 times before bouncing up, above the expected area 100.00. We move to next updated view on DXY.
I’ve taken a break from my public community engagements to focus on raising my three kids, but I'm rediscovering my passion for working again. Stay connected, as I plan to return and rejoin my old communities with a lot of new skills one day soon.
Clause de non-responsabilité
Les informations et les publications ne sont pas destinées à être, et ne constituent pas, des conseils ou des recommandations en matière de finance, d'investissement, de trading ou d'autres types de conseils fournis ou approuvés par TradingView. Pour en savoir plus, consultez les Conditions d'utilisation.