The Dollar Is Solid Ahead of Fed Decisions
The U.S. Dollar index is trading around 96.44 points and is ready to resume climbing after three weeks of consolidation. This consolidation can be seen on the daily and weekly chart as a triangle that has been already broken through.
We should remember that sometimes large movements begin on expectations before the event itself happens. This triangular pattern is 1.4 points high and the next target for the price could be at 97.80 points. This target could also be received when measuring the width of the rising channel, which is in the direction the index has been moving since May 2021. The upper margin of this channel was already broken through in the middle of November. Since then, the index has tested a broken resistance as a new support but went sideways.
If the target at 97.80 is passed, the Dollar index will be heading to 98.30 points, a 61.8% target from the decline from 103.96 points to 89.165 points. This new landmark will be very important, as only in the case of a breakthrough will there be landmark technical reasons for a continuous rise to all-time highs to emerge.
The Federal Reserve (Fed) is expected to finish its tapering process by March 2022 instead of the current deadline in June next year. This would signal that the Fed may hike interest rates three times in 2023 and 2024. On the other hand, some outrageous optimists believe the Fed could raise interest rates during its meeting today. Such an opinion was claimed by Michael Hartnett, Chief investment strategist at the Bank of America (BoA). This would be shocking. The BoA’s Hartnett noted that the current situation amid a strikingly similar unwind in tech stocks could be compared to the dot-com bubble in 2000. So he recommends that investors should "sell the rip" rather than "buy the dip" in stocks ahead of the announcement of the decision.
With this in mind we may buy the Dollar. If Hartnett’s bet is won, we may receive explicit and emotional U.S. Dollar strengthening against all peers. One more thing that should be noted here is that the U.S. Dollar continues to follow the upward trend. I strongly believe that the trend is your friend, so it is better to follow it.
We should remember that sometimes large movements begin on expectations before the event itself happens. This triangular pattern is 1.4 points high and the next target for the price could be at 97.80 points. This target could also be received when measuring the width of the rising channel, which is in the direction the index has been moving since May 2021. The upper margin of this channel was already broken through in the middle of November. Since then, the index has tested a broken resistance as a new support but went sideways.
If the target at 97.80 is passed, the Dollar index will be heading to 98.30 points, a 61.8% target from the decline from 103.96 points to 89.165 points. This new landmark will be very important, as only in the case of a breakthrough will there be landmark technical reasons for a continuous rise to all-time highs to emerge.
The Federal Reserve (Fed) is expected to finish its tapering process by March 2022 instead of the current deadline in June next year. This would signal that the Fed may hike interest rates three times in 2023 and 2024. On the other hand, some outrageous optimists believe the Fed could raise interest rates during its meeting today. Such an opinion was claimed by Michael Hartnett, Chief investment strategist at the Bank of America (BoA). This would be shocking. The BoA’s Hartnett noted that the current situation amid a strikingly similar unwind in tech stocks could be compared to the dot-com bubble in 2000. So he recommends that investors should "sell the rip" rather than "buy the dip" in stocks ahead of the announcement of the decision.
With this in mind we may buy the Dollar. If Hartnett’s bet is won, we may receive explicit and emotional U.S. Dollar strengthening against all peers. One more thing that should be noted here is that the U.S. Dollar continues to follow the upward trend. I strongly believe that the trend is your friend, so it is better to follow it.
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