chartwatchers
Long

US Dollar Index - Falling wedge

TVC:DXY   US Dollar Currency Index
2354 13 50
The US Dollar             ( DXY             ) is in a falling wedge . It needs to tag the 10 EMA soon. At the same time it could break out of the falling wedge .
4hrs MACD crossed over showing to the upside. RSI has bullish divergence and leaving oversold.
As the FOMC meeting is coming the Dollar will rally again.
I still think that they will raise the rates next week.
Comment: The party is beginning. Draghi called the DCL in the US Dollar Index.
Breakout of the wedge. Breakout above the 10 EMA.
snapshot
I probably know why you still think that they will raire rates at next FOMC, but do you think that the dollar can handle it ???? ...because if it cant they wont hike rates at next FOMC. Thank you for your opinion.
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gold in space
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92.5
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Pls check prices now. DXY breached the lower line.
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Why do you think interest rates will be raised next week arpi?
+1 Reply
avento saad2
There is no reason for rate hike in June. Arpi possibly trapped into "wishful thinking", unfortunatetly
+1 Reply
saad2 avento
Don't think it is wishful at all. A reasonable case can be made for a rate hike in June or July. I'm interested in hearing what the rationale is behind a rate hike in June.

But at this rate, given Yellen's speech and the market's expectancy of rate hike in June (almost nil) I doubt the FED will decide to hike rates in June.

Why? Because Yellen has always pushed for normalizing market expectations ahead of a move. In her own words from some weeks ago she said the point of mentioning a possible rate hike in "coming months" was to stabilize market expectations and not hit them with a shock.

The fact that she did not pursue a hawkish tone in her latest speech suggests that she does not need to "stabilize" or "normalize" markets as there will probably not be a rate hike.

This is my interpretation of the actions of the chairwoman and market psychology. There's a bit of fundamental analysis that suggests, to me, that a rate hike in June may not be feasible.

July? I don't know we'll take them as it comes.

That's why I want to hear why Arpi thinks there may still be a rate hike in June.
+5 Reply
wkcham saad2
saad2, I agree absolutely with you. I doubt the Fed will raise the interest rate but I believe they will issue a hawkish statement to guide the market for a possible rate hike in July. If the Fed does not raise the rate by July, they need to wait until December for rate hike.
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saad2 wkcham
And the December hike seems to be the problem. Many feel, including some FED members (not sure if it was Mester or someone else) who said that they have to weigh the pros vs cons for a rate hike in June/July as, after that, it may be too late for the economy by then.

There is some credence to that perspective.

1) June rate hike (June 15) might make markets too turbulent as Brexit vote is the following week (June 23rd). The FED has made it abundantly clear (see February remarks and then most recent ones from last 2 weeks) that they do consider major events outside of the US economy when making decisions ABOUT the US economy.

2) July comes at a better time - it is right after Brexit and before the US elections. Two major events (one of which could be a non-event after a few days of happening) that can cause enough market turmoil to derail the economy for a bit longer.

3) December is right at the end of the year and that could be a little too late. This data dependent FED will want some more job readings before making a decision and December (possibly July too) timeframe allows for that but at the expense of giving up too much time.

This leaves us with a possible July hike.. but is it enough data? We'll know with time. A July hike seems to be gaining some traction..
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Dollar will make rally only if brexit triggers turbulence at stock markets
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