Following our recent examination of the American Dollar Index (DXY), the bullish momentum has continuously propelled the dollar, reaching peaks not observed since November 2022. It's worth noting the impressive streak of 11 consecutive weekly green candles. As we inch closer to a historically significant reaction zone, there's been a noticeable price rejection of over 1%. The week ahead is shaping up to be tumultuous, potentially magnified by several key events.
Major Events Lined Up This Week:
1. September PPI Inflation - Expected on Wednesday.
2. Fed Meeting Minutes - Slated for release on Wednesday.
3. September CPI Inflation - A highlight for Thursday.
4. OPEC Monthly Report - Also to be unveiled on Thursday.
5. Jobless Claims Data - Thursday promises to be bustling with this data on the docket.
6. Fed Speaking Events - Various engagements are scheduled throughout the week.
These events, primarily centered around inflation and anticipated responses from the Federal Reserve, suggest that the weeks ahead could wield a significant influence on market sentiment.
Current chart patterns indicate that the probability of the dollar touching the 110.00 price mark is on the rise, supported by the bullish PA & channel. However, adverse news for the dollar might trigger a potential reversal. In such a scenario, the 105.50 to 105.75 range stands out as a primary reaction zone. A breach below this area could signify DXY's shift towards a bearish trajectory.
A word of caution, especially for the novices: the markets can be notoriously unpredictable, more so during event-loaded weeks. Exercising caution, staying informed, and emphasizing risk management are a must.
I'll be on the lookout and will touch base in a few days, waiting to observe the daily closing patterns over the next 2-3 days and the market's response to the week's opening events.
This information should be viewed as guidance and not definitive instructions. Thorough research and consultation with a financial advisor are essential before making any investment decisions.
Luca Sepe