A deeper setback by the DXY Index may soon playout towards the mid-June swing low at 103.42. Daily MACD is dropping below its signal line while daily Slow Stochastics have reversed back below their median line. The DXY Index is below its daily 5-, 8-, 13-, and 21-EMAs, which are aligning in bearish sequential order. Concurrent with the break of the uptrend from the late-March and late-May swing lows, there is growing technical evidence that a near-term top has been carved out. The drop by the DXY Index has seen the bullish outside engulfing bar/key reversal low taken out, suggesting that the recent bullish impulse has failed. DXY PRICE INDEX TECHNICAL ANALYSIS: DailyTimeframe (August 2021 to August 2022) (CHART 1) The knock-on effect in financial markets has been a weaker US Dollar, with the DXY Index breaking below multi-month uptrend support and USD/JPY rates turning lower towards the August lows. The odds of a 75-bps rate hike in September have dipped back below 50%, where they had been for the past several days in the wake of the blowout July US jobs report. The unexpected deceleration in US inflation rates in July is weighing down US Treasury yields and cutting down Fed rate hike odds in the near-term.
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