We're in an area of daily supply (responsible for taking out daily demand on the 5th) shorts can be taken in here since we pulled back on Friday. The daily trendline has held strong so this would need to be taken out in order to get to the next daily demand area around the 1.3700 mark.
Intraday
On Monday I'll be looking out for a short in the 1h supply area around the 0.618 fib retrace level, dependent on confirmation on the 5m chart.
On DXY we broke out of a descending TL/falling wedge and are re-entering the demand area which created the major move. We've just completed a retrace between 0.5 and stopped just shy of 0.618. On the daily it's created a large overextended W formation of which the bearish movement last week was the retrace leg, the next step in this is an impulsive bullish move. Keeping an eye on US10Y, I'd like to see it test the 1h demand around 160bps and see if it can build a base there, so if this pulls back it could mean the dollar will drop a bit more before going up.
Fundamentals:
I think the rising treasury yields/US inflation expectations story is going to gain momentum. US10Y yields just broke the last high and are on a roll. More economic data out next week and the stimulus is hitting which is only going to add fuel to the fire. US economy is about to get pretty hot. Meanwhile in the UK we're still in lockdown and the economy and unemployment is getting worse. We don't have the same inflationary pressures the economy is going to stay in the doldrums for a while. With that said, Gilt yields are on the rise too but didn't break the last high. The COT report is showing the addition of USD longs and removal of GBP longs.
Intraday
On Monday I'll be looking out for a short in the 1h supply area around the 0.618 fib retrace level, dependent on confirmation on the 5m chart.
On DXY we broke out of a descending TL/falling wedge and are re-entering the demand area which created the major move. We've just completed a retrace between 0.5 and stopped just shy of 0.618. On the daily it's created a large overextended W formation of which the bearish movement last week was the retrace leg, the next step in this is an impulsive bullish move. Keeping an eye on US10Y, I'd like to see it test the 1h demand around 160bps and see if it can build a base there, so if this pulls back it could mean the dollar will drop a bit more before going up.
Fundamentals:
I think the rising treasury yields/US inflation expectations story is going to gain momentum. US10Y yields just broke the last high and are on a roll. More economic data out next week and the stimulus is hitting which is only going to add fuel to the fire. US economy is about to get pretty hot. Meanwhile in the UK we're still in lockdown and the economy and unemployment is getting worse. We don't have the same inflationary pressures the economy is going to stay in the doldrums for a while. With that said, Gilt yields are on the rise too but didn't break the last high. The COT report is showing the addition of USD longs and removal of GBP longs.