DXY: Stay Put. Something big is coming!
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Fundamental Side:
It is widely agreed that US Dollar has a directly relationship with FED interest rate. When the Federal Reserve increases the federal funds rate, it typically increases interest rates throughout the economy. The higher yields attract investment capital from investors abroad seeking higher returns on bonds and interest-rate products. Simple words, less US dollar supply will be in the economy and therefore appreciate US dollar value. We expect to see FED make a response to a very low FED funds rate very soon. This would either move the US dollar (DXY) up (if rate increases) or down (if rate decreases further (Less likely)). In short, we are planning to see FED increases its rate in the near future, following by an appreciation of US dollars.
Technical Side:
Price pattern and RSI show divergent, suggesting price reversal. Supporting by the major trendline, US dollar is expecting to squeeze out of the triangle upwards directly.
Remember money management is the key. Watch the price action closely. Trade wisely and responsibily. This analysis is based solely on my professional opinion.
Cheers,
An investment analyst from a Japanese Bank.
It is widely agreed that US Dollar has a directly relationship with FED interest rate. When the Federal Reserve increases the federal funds rate, it typically increases interest rates throughout the economy. The higher yields attract investment capital from investors abroad seeking higher returns on bonds and interest-rate products. Simple words, less US dollar supply will be in the economy and therefore appreciate US dollar value. We expect to see FED make a response to a very low FED funds rate very soon. This would either move the US dollar (DXY) up (if rate increases) or down (if rate decreases further (Less likely)). In short, we are planning to see FED increases its rate in the near future, following by an appreciation of US dollars.
Technical Side:
Price pattern and RSI show divergent, suggesting price reversal. Supporting by the major trendline, US dollar is expecting to squeeze out of the triangle upwards directly.
Remember money management is the key. Watch the price action closely. Trade wisely and responsibily. This analysis is based solely on my professional opinion.
Cheers,
An investment analyst from a Japanese Bank.
Note
Possibility #1: FED Rates remain near zero (which is quite likely: Inflation rate has not yet hit 2% suggesting economy is moving too slowly). The US dollar will remain sideway in this orange triangle. Note that from a technical perspective, there are plenty rooms (orange triangle) for the price to move sideway (Until mid 2021).Possibility #2: FED raises its rates. This would increase the value the US dollars. HOWEVER, this will take some times to price to reflect the information. It could be weeks or months. When that happens, Gold will lose its momentum.
Possibility# 3: FED lowers its rate (the least likely). This would happen when the economy is so good that the authority has to charge people for buying its bond and pay investor for taking its money (assuming that interest rates are negative or below zero). Then the US dollar might weaken further and gold might raise even higher !
Note: This is my opinion from years of professional experience in the industry
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