#DXY is At Critical Moment
🔹The DXY chart above shows the US-German 10-year bond spread, an important metric which typically guides the pair.
🔸The interest rate differential suggests the dollar is overvalued or the euro is undervalued as the last time the bond spread was 1.87% the index traded at the 102.25. The price at the time of writing is 105.75.
🔹There is scope for the dollar to first strengthen with a Strong GDP growth and a robust labor market may delay US rate cuts compared to other countries, sending the price back up to 105.500, 105.800, 106.400 and 107,100.
🔸But on the other hand Risks including an unforeseen economic growth and pressure from elevated oil prices can potentially affect the inflation trajectories thus weakening the Dollar sending it down to the 200 MA 104.490, 103.504 and 102.600.
🔹The next few months are crucial for potential policy shifts to a more dovish stance by the end of Q3 if positive trends persist.
Zanzibar Trading
🔸The interest rate differential suggests the dollar is overvalued or the euro is undervalued as the last time the bond spread was 1.87% the index traded at the 102.25. The price at the time of writing is 105.75.
🔹There is scope for the dollar to first strengthen with a Strong GDP growth and a robust labor market may delay US rate cuts compared to other countries, sending the price back up to 105.500, 105.800, 106.400 and 107,100.
🔸But on the other hand Risks including an unforeseen economic growth and pressure from elevated oil prices can potentially affect the inflation trajectories thus weakening the Dollar sending it down to the 200 MA 104.490, 103.504 and 102.600.
🔹The next few months are crucial for potential policy shifts to a more dovish stance by the end of Q3 if positive trends persist.
Zanzibar Trading
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