2023-05-03 • Updated
It's been an exciting start to the week, and month, for the US Dollar, as it gained some bullish momentum on Monday thanks to a 0.5% rise in the US Dollar Index (DXY), propelled by a whopping 4% increase in the benchmark 10-year US Treasury bond yield. This surge saw the DXY reach a new high not seen since April 11, hitting 102.40. However, this didn't last long, as the DXY dropped to 102.00 after the bond yield fell sharply in the wake of the latest US data.All eyes are now on the upcoming Federal Reserve (Fed) two-day policy meeting, set to kick off on Tuesday, May 2, with policy decisions being announced on Wednesday. While many in the market are expecting the Fed to raise its policy rate by 25 basis points (bps) to the range of 5%-5.25%, the critical factor to watch will be the language used in the policy statement regarding a potential 'pause in tightening,' which could have a significant impact on the valuation of the USD. So, while we keep an eye on the Fed's decisions and statements, here are a few trade ideas.
The US Dollar has undoubtedly been bleeding for a few weeks now with only a few occasional retracements - one of which occurred on Monday, as earlier mentioned. The important case here, however, is to consider whether or not the recent break of structure would be a ray of sunshine or a storm cloud. The price action confirmations supporting a likely bullish reversal include a trendline support, a market structure break, and a drop-base-rally demand zone. These are important because all of these are happening smack in the middle of a demand zone on a daily timeframe.
Analysts’ Expectations:
Direction: Bullish
Target: 102.162
Invalidation: 100.765
As I mentioned earlier, the weekly timeframe of GBPUSD retested a supply zone. On the 4-Hour timeframe, however, the price is consolidating within a wedge pattern and would likely turn bearish in a while. This sentiment is based on the price action confirmation from the trendline resistance - occurring inside the weekly supply zone and the 200-period moving average on the weekly timeframe.
Analysts’ Expectations:
Direction: Bearish
Target: 1.23982
Invalidation: 1.25961
Gold typically presents a typical consolidation channel inside the weekly supply zone. There is also, however, a rally-base-drop supply zone at the most recent H4 high. My major sentiment remains bearish regardless, pending the Fed's decision. If the decision is positive for the Dollar, it'd be the final piece of the puzzle.
Analysts’ Expectations:
Direction: Bearish
Target: $2050.20
Invalidation: $1987.50
The US30 index has already kicked off in favor of the US Dollar. The onset of the bullish price action is the confluence of trendline support and the drop-base-rally demand zone. Should the interest rate decision be raised as projected, the ensuing strength for the Dollar is expected to push US30 toward the 34145 region.
Analysts’ Expectations:
Direction: Bullish
Target: $34023.33
Invalidation: $33405.50
The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.
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