DXY - ABCD pushHey there!
Here is the analysis concerning DXY for the following week. It looks like we've past the previous week trying to get in the rebound for what could be a continuation of the movement upward of the dollar, the C point.
Last week the market was consolidating after the big push of the dollar two weeks ago. DXY is pushing strong, supported by the fresh US news that popped out last weeks, showing that the US economy is pretty resilient. Therefore, the market is anticipating the fed reaction.
We're in this situation now where, Fed has been pushing rates higher for quiet a while to try to prevent inflation from devastating the economy, but, if the US datas are showing signs that the economy isn't slowing down then, the Fed might have to raise again the interest rates, or maintain them high longer then expected, pushing away the date the Fed pivot and then making the dollar still attractive compared to other currencies for which interest rates are under hte Fed's Level.
From a TA point of view, we're continuing the rebound that started around the 100 level, last week we broke and retested the 102.5 level crossing and retesting the upper trendline of the descnding channel DXY was in for months.
All of this is bullish signs for DXY that tend to make me say we might be into a trend reversal, at least temporarely.
I'm expecting dollar strenght this week, fueled by the news. From previous news, seems like there's a divergence between the market expectation and the actual numbers, in other words, market is being very emotionnal right now. Let me explain, the Fed has done everything to counter the inflation, its strategy being to slow the economy down, in order to lower the buying power of the working class, so the prices would drop. But, if datas are showing that the economy is still strong then well, Fed, the job isn't done, so you gatta do something about it.
Only 2 options really :
1) Datas show economy/inflation is slowing down => Fed will take it easy, Dollar will eventually fall
2) Datas show that economy and inflation is not slowing down => Fed will raise the interest rates higher, or keep them higher longer => Dollar will keep on rising
This week, we have inflation rate US and US CPI. If CPI is better than expected then Dollar will shoot up. Inflation is different because it's a lagging indicator, so even if it's falling down now, but that the US economy is working full speed then, the working class will eventually level up to inflation, but then, the FED looses at containing inflation under or around 2%
Well, we'll see, but, I'm bullish on DXY for this week, and will actively look for short on XXXUSD pairs, and for longs on USDXXX pairs,
Cheers everyone and safe trading!!
