chartwatchers
Short

US Dollar Index - Currency War Dogs

TVC:DXY   US DOLLAR CURRENCY INDEX
1520 10 43
3 months ago
We are in the middle of the currency wars. Each participant is trying to weaken its own currency...
But some of the players are cheating. I will show you today who was the liar on Friday.

At Jackson Hole Yellen and Fischer exactly knew that the NFP data will be weak. They just played their roles. “In light of the continued solid performance of the labor market and our outlook for economic activity and inflation , I believe the case for an increase in the federal-funds rate has strengthened in recent months,” said Yellen.
Fed Vice Chairman Stanley Fischer was more explicit, saying Yellen’s comments were consistent with possibly two rate increases this year—including a move as early as next month. Yellen and Fischer both stressed that any policy decision will be dependent on economic data.
They both know there will be NO 2 rate hikes this year. Maximum one. And maybe not even one...
In 2014 summer the dollar started to rally as the FED announced the next rate hike period. The dollar was rallying in 2014 but no rate hike happened. In 2015 the rally continued and peaked in March. At that time we were hearing 2 rate hikes in 2015. We got one in December and the whole market stayed bullish . Everybody was talking about DXY120$.... At the beginning of 2016 we heard about 4 rate hikes in this year. It's September and we haven't had even one. As I'm typing this the US dollarindex( DXY             ) is still at 96$...
Guys sooner or later this bubble will burst and I think it will happen next week when Fischer or another bad cop will announce or hint the miss of the rate hike in September. The chance for a rate hike in September is almost zero. The November FOMC meeting is so close to the elections that noone will risk a rate hike in November.
Now the FED's credibility is good. They told us the rate hike will happen upon the NFP data. So now they can blame the miss of the rate hike on NFP. I'm quite sure that next week someone from FED will come out that the data is disappointing and the chance for the Sept hike is lowered.

At the first minutes after NFP announcement the dollar started to do what it had to do. It was falling for 10 minutes.
But before the dollar could really have collapsed 15 minutes after the data a big player started to push up the dollar by selling its own currency.
At the idea update box lower I posted a chart where you can see together all the important currencies against the dollar: USDJPY             , USDCAD             , USDEUR             , USDAUD             , USDGBP             . So we can see who was intervening. Who was doing nothing on that day has a red candle: Australia, Canada, UK. And those who were intervening has a green candle.
So based on that chart we can see BOJ has done a smaller intervention but what ECB did was brutal.

At least we know that FED and ECB is not communicating. The ECB was late with this intervention. They should have done it when price was tagging the 200 SMA 4 days ago... But they were so sure this data is good that they didn't do anything. But at least the ECB's wardogs were ready at the NFP data and when they saw the dollar is collapsing the immediately started to intervene..

Why is this important ? We have ECB rate decision the next week and based on this intervention Draghi wants to weaken the Euro             again. Though I don't think the ECB can stop the dollar drop we have to be ready that next week - maybe at the ECB announcement - the US Dollar Index             will break marginally above the 200 SMA .

I'm still short in the Dollar Index             , but with an EUrUsd             long position I would wait for ECB decision.
3 months ago
Comment:
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3 months ago
Comment:
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3 months ago
Comment: BOJ stopped the intervention at 23:45 Tokyo time... (Japanese wardogs are not working after midnight...)
After that you can see the natural forces of the USDJPY markets
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3 months ago
Comment: We might want to test the trendline before ECB.
snapshot
3 months ago
Comment: At 94-94.5 in the green zone.
oilyprata
3 months ago
Amazing analysis! Thank you Arpi! :) Big fan!
+1 Reply
AlbCM
3 months ago
pretty much similar to my EURUSD chart but it should not go below 92 because May 3 was the minimum for this year.
+1 Reply
artwiz
3 months ago
Perfect!
+1 Reply
michisuperfreak
3 months ago
Is this really how it works? Crazy...:P
+1 Reply
epalazzo
3 months ago
What do you think about closing dxy shorts & eurusd longs before ecb decision?
Reply
chartwatchers PRO epalazzo
3 months ago
I dont know what Draghi has in his bag...
If you are heavily invested I would close some positions tomorrow. But not all. What if he diappoints the market and the Euro starts to rally immediately.
I think even he doesnt know what the market wait from him.
He wants to weaken the Euro for sure. But now the FED doesn't want the strong dollar anymore.
+3 Reply
chartwatchers PRO chartwatchers
3 months ago
The strongest dog will take the bone: and it's the USA. The dollar starting the bear market. We lost the 200 SMA.
+2 Reply
epalazzo chartwatchers
3 months ago
Thanks for your reply. You always seem so good in speculating before and after news events as well. Will look for more of your updates as we are closing in to ECB decision.
+1 Reply
webmiztriz PRO
3 months ago
:o) Robin Hood is BACK!
+1 Reply
epalazzo
3 months ago
Wow! I wouldn't expect such a move! I hope it is not going to reverse as it did twice recently.
Reply
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