CesaroPelucci

Dollar near breaking out or bearflag?

TVC:DXY   U.S. Dollar Currency Index
Welcome back traders, a mid-weekly update on the market;

Gold entered the 1720-1740 support zone and we have a reasonable bounce so far from 1730, however not strong enough to be reversal worthy. The bounce was primarily due to Powell's dovishness yesterday where he mentioned the following 3 points:

1. We have met all but met the test for taper.
2. Even with taper we would be adding accommodation until middle of next year.
3. Test for raising rates is higher.

Powell is scheduled today again, and I expect he remains dovish. This will have its effect on the market and I see more bullishness to come from gold after his speech.

Today is an extra important day as a bunch of ECB bigwigs is scheduled to speak about "Structural change and the implications of climate change for monetary policy", but we all know what we want to hear from them. Is ECB going to follow the FED in tapering their QE-program?
Although LaGarde mentioned they will drive back their asset purchases, she did not mention the word 'tapering' in the last ECB-press conference.

The GBP-plan failed miserably after BoE's Mann downplayed a rate hike this year and we saw GBP crumble. This was a reminder for me to stay out of currencies and stay with godly gold . All USD-pairs are on diagonal support/resistance and I expect a bounce from this level, since 60% of breakouts fail. However, if there is a breakout, then this is a strong signal in the market that there is a big shift of money going on, primarily towards the USD. If we do get a bounce, and we see the dollar retrace, then this is the signal that we will remain in the range until the next FOMC in November.

End of week, end of month and end of quarter with US GDP scheduled for tomorrow. Exciting and volatile three days ahead. Good luck and happy pippin'.

Cheers,
Cesaro