2021-11-09 • Updated
From the investors’ point of view, the year 2020 starts on a positive note. As Donald Trump highlighted in his shining speech in Davos on Tuesday, the United States have almost entirely reconfigured the global trade setting. Thanks to the current administration (as per Mr. Trump), the country is now in a much-improved position, in relation to other countries. US-China deal, US-Canada-Mexico agreement, other coming deals with the UK, Japan, and South Korea – all of that surely brings more certainty to the global economic vibe. Particularly, it brings more risk appetite among investors, who now prefer something more adventurous than the US Dollar. In consequence, demand for the greenback is weakening, putting it under pressure. That is exactly what the US President wants to see: as he strongly supports the US exports, depreciation of the USD benefits American exporters. Hence, the question is, how long the environment will be reassuring enough to keep investors away from the US dollar, favoring US merchandise and services sold abroad, to the lasting joy of Donald Trump.
Since Summer 2018, the US Dollar index has been showing a rising trend, due to the US-China trade conflict and other negative influence factors arising in the midst of this trade war. Altogether, that kept investors interest in the US Dollar at high levels, and demand for the currency was growing. However, October 2019 was the month when it became finally clear that the US and China are indeed willing to put an end to the trade disputes. In confirmation, the Phase One deal to be signed later on was announced. Consequently, investors felt safer and stopped fleeing accumulating reserve assets, and the US Dollar in particular.
That’s why since then the two-years uptrend is very close to a reversal. The current level of 97.35 is a local high. It was reached when the index bounced back up after dropping to 96.10 – the summer-2019 low. Also, a “death cross” was formed by the 50-day Moving Average crossing the 200-day upside-down – that’s about the resistance level of 97.50, which is tested by the index currently. If the index breaks it on the way up, it will be likely to touch the secondary resistance of the 100-day Moving Average at the level of 97.70. Otherwise, if the trajectory makes another dive down as it seems likely to, the support of 96.80 will be the first threshold to check the downward movement. If it is passed, the index will aim at the support of 96.10, questioning the entire long-term uptrend.
The daily chart of EUR/USD confirms the tendency and time zones we have noted with the US Dollar index. Since the first part of 2018, the Euro has been consistently depreciating against the USD. But that changed in Autumn 2019 for the reasons explained above. Currently, the price is at 1.1090 – that is a bounce back after it reached 1.1220, a summer high. At the same time, that is about the area where the larger downtrend collides with the local upswing. If the uptrend climbs to the resistance of 1.1220 again and goes further, we will see a new long-term trend forming.
Conclusion
The short-term seems to offer a relatively high probability of the US Dollar index climbing to the local resistance. But in the mid-term, if the peaceful economic environment doesn't change, there is high likelihood that it will go further down in course of depreciation of the American currency. Watch the levels, stay updated, and trade smart!
Global equities on Wall Street experienced a mixed session following the Thanksgiving holiday, heading for the most significant one-month rally since November 2020. MSCI's global shares index slightly eased but was still on track for an 8.5% monthly gain, fueled by growing investor confidence that U.S. interest rates...
Earnings season is a crucial time for investors and analysts, as it provides insights into how well companies have performed over the past quarter and gives indications of their future earnings. In 2023, expectations for US Q1 earnings were low due to economic challenges and rising interest rates. Surprisingly, many companies beat these low expectations, with 75% of S&P 500 companies surpassing forecasts.
When I started trading stocks a few years ago, I often needed to pay more attention to my technical analysis skills and trust that the market would play fair according to my analysis. I have since discovered that the safer approach to trading stocks is to, more often than not, seek out investing opportunities - that is, catching stock commodities with a potential to rise.
Gold price (XAU/USD) experienced a notable turnaround, gaining fresh bids after a $125 pullback from its recent peak. Federal Reserve Chair Jerome Powell's recent speech suggested a reluctance towards aggressive rate cuts, dampening speculations of immediate policy easing. Market sentiment leans towards the belief that the Fed has concluded its tightening cycle, with a growing...
Bitcoin's price remains stagnant despite the Fed's slightly less hawkish tone. In contrast, Bitcoin has outperformed other assets, doubling in price from $16K to nearly $38K this year. Improved fundamentals, including the resolution of Binance concerns...
Hey folks, it’s a wrap to yet another month in the 2023 calendar, and I’m guessing you know what that means - time for another episode in the “What To Trade” series. For December, I will be mapping out trade more cautiously as the market volatility often drops
FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.
Your request is accepted.
A manager will call you shortly.
Next callback request for this phone number
will be available in
If you have an urgent issue please contact us via
Live chat
Internal error. Please try again later
Don’t waste your time – keep track of how NFP affects the US dollar and profit!
|
