PPI forecast and the State of the Dollar

Since the fateful events of March 10th, 2023, I mean the SVB and Signature Bank crash, there has been a lot of attention on the US economy and the Dollar from the international community. In this light, examining the effects, this attention might have on the US Dollar ahead of the upcoming PPI data is crucial.

DXY - US DOLLAR

DXY has just recently broken below the previous low at 104.116. There is usually a bit of retracement after a breakout in the market. On this premise, I will maintain a bullish sentiment on the Dollar, with a target of 105. However, please note that the overall trend is still bearish, based on the position of the Moving Averages, the recent break below the previous low, and the Fibonacci of the breakout move; we are simply trying to capitalize on the retracement move here!

Analysts’ Expectations:

Direction: Bullish

Target: 105

Invalidation: 103.4

EURUSD

As for EURUSD, if we expect the US Dollar to be stronger, it means EURUSD should be bearish by correlation. Combine that with the fact that the price has just recently been rejected from the 100-Day Moving Average and the rally-base-drop supply zone on top of it, and you will end up with a clear bearish sentiment.

Analysts’ Expectations:

Direction: Bearish

Target: 1.05799

Invalidation: 1.07551

GBPUSD

Similar to the setup on EURUSD, we see how GBPUSD reacts to the supply zone around the 76% Fibonacci retracement level. My target price here is 1.19226.

Analysts’ Expectations:

Direction: Bullish

Target: 1.19226

Invalidation: 1.22065

XAUUSD

XAUUSD aligns with our US dollar sentiment based on the DXY chart. On the Daily timeframe, we see the recent break below the low at 1897.55 and the rejection from the rally-base-drop supply zone at 76% of the Fibonacci retracement. This goes to confirm our expectation of a stronger US Dollar.

Analysts’ Expectations:

Direction: Bearish

Target: 1915.7

Invalidation: 1881.00

US500

US500 paints a very clear picture. The trendline support, a breakout above the previous high, the drop-base-rally demand zone, the 88% Fibonacci retracement level, and the relative position of the moving averages to one another all speak in favor of a bullish movement.

Analysts’ Expectations:

Direction: Bullish

Target: 3967.55

Invalidation: 3786.32

CONCLUSION

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.

TRY TRADING NOW

You can access more of such trade ideas and prompt market updates on the telegram channel.

Author: Adetola-Freeman Ogunkunle

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