The near-term outlook for the US dollar

By 19/08/2021News
morning-news

Gold  1779,195
(-0,45%)

EURUSD   1,1678
(-0,27%)

DJIA  34862,50
(-0,07%)

OIL.WTI  64,305
(+0,12%)

DAX  15889
(+0,01%)

Today we are not talking about the euro/dollar pair or the pound/dollar pair. It is about the outlook for the US dollar against a basket of currencies. The dollar index (DXY) will help us with this.


DXY

DXY

Why the dollar index and not the familiar euro/dollar pair that almost all of our traders trade in? The fact is that sometimes both the US dollar and the EURO rise or fall against a basket of currencies. It is clear that in this case the quotation of the pair does not change much. At the same time, the dollar can rise or fall heavily against other world currencies. This is not a problem with the dollar index. It is clear whether the USD is rising, falling or flat. Also we decided to pay attention to the USD index today, because of a nice technical pattern. Let’s look at the daily chart above. At least the “cup and handle” pattern is visible. We have analysed it in one of our previous newsletters.
And at the most, the bears of the American dollar should not just be uneasy but scared when looking at the chart. The price came again to the strong resistance line at 92.9-93.5, which it has repeatedly pushed up and down from. The level is very strong. That means that there are a lot of stops behind it. Plus visually above it is not visible any resistance levels at all. Thus, a sharp upward movement of the USD index, with the first target of 95, is possible in case of a breakdown of this level.
An additional impulse to the movement may be given by the removal of stops already in the pair EUR/USD below 1.17.
In addition to the technical picture, the situation is also under pressure from the fundamentals. Many investors and traders are playing ahead. They expect that FRS in the near future will announce about the beginning of minimization of the program for economy stimulation. There is a potential date of this event. In a fortnight time at the conference of central bank governors in Jackson Hole.

03.30 Australian unemployment rate for July
14.30 US initial jobless claims


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