I don't expect USD to rebound aggresively but there are some chance we start to price in the Next Interest rate hike at this level. However, my expectation is a long period of consolidation around this pricing. Hitting the 99.665 mark and having a good pull back will be fundamental to confirm the reversal yet.
RSI is exahusted, as well as MACD. However, as the steam in GBP and EUR rallies start to fade and look for supports, the USD will get some headwinds in mantaining around this level. for the mid term. I´d project a clear reversal formation appearing. This Quarter is marked by the growth of the GBP and EUR, as well as the further weakening of the JPY. As Britain tries to control inflation wiith low growth, and EUR deepens its recession and the chance that the bank of Japan adjusts its interest rates. The USD will mantain a downward trend with clear Lower highs and lower lows. The momentum gained by this histrical drop and the lowing pospects of a rate hike in August, will bear consequences in whether the USD will come stronger than this level in this quarter but chances are slim. even if there is a good rebound to the current downtrend. As the ECB announced that it may only have one more increase of rates for 2023. The USD and EUR may level more, however, the EUR has the upper hand for momentum and the higher chances of another increase in 2023. This is important to bear in mind since EUR is the biggest component of the DXY and therefore the rate of many other currencies is deeply affected by it. Personally, I only see good growth of the USD in periferial exchange rates, such as SGD, CNH, and the reversal of the MXN gains. SEK, NOK, AUD and JPY are other currencies to watch for major votality that could prove very rewarding. It is essential to note that we entered the phase where the market will be eyeing, who keeps interests rate stable the longest, and as they all level similarly, the incoming recessesion. the market will weight in economic performances and trade accounts at the last quarter of the year. In the last quarter of the year, economically speaking we will see the US is coming out with strong growth, but capped by high debt levels. on the same note, trade accounts for the GBP, EUR and JPY are in perilous and struggle with high debt. Of these, currently, Only GBP and CAD enjoy the lowest premia of the G7 economies + China.. This could see the second leg of strengning of safe currencies and assets considered safe heavens, like GOLD. Similarly, emerginng market currencies like CHN, BRL, KOR and perhaps the indian rupee will probably see great gains in late Q4 2023 to Q1 of 2024.
I agree with you! We should see a reversal from the DXY - the sell-off needs to rest a bit, and the MAJORs are overbought.
PAGagnier
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Also the weekly 200 EMA is currenty at around 99.50ish, will it blend? that is the question.
suikaking
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@PAGagnier, it seems that it had an efect! too early to call it a reversal but it is the first time I saw USD alive in a couple of days! thanks to the JPY who set it all off
ibrar550
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fundamentals look completely the opposite....98 beckons
suikaking
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@ibrar550, Interesting. I will look closely into your suggestion. But, obviously it is still too early to say if it the first sign of a reversal or correction. but I dont think it is a waste of time to keep an eye to any possible change. One thing i forgot to mention was that according if we build a channel using the top of the last peaks, and previous bottom we have the yellow line seen below. I do think that will offer some resistance to the dollar. and as the EUR, GBP momentum looks for a new support maybe it all falls in like dominos to mantain USD in that range for the short maybe mid term. Also JPY is un a correction at the moment. one of the reasons the USD made an U shape just before close.
ibrar550
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@suikaking agreed, think once all the other major central banks go dovish and inflation falls fast you will see USD get to 101 before 103 then drop down to 98
suikaking
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@ibrar550, agreed too, I regret not getting into the GBP trade haha miscalculation. I thought EUR would do best. but I am trying to trace where the capital that made the Nikkie rally is heading next. My suspicions are smallcap 200, NASDAQ and FTSE
ibrar550
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@suikaking GBP will drop hard soo give it a month after the next rate hike