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Gold vs. Dollar: Debunking the Correlation MythIn financial markets, it's common to look for correlations between different assets to understand their behavior and make informed trading decisions. One widely discussed relationship is between Gold (XAU/USD) and the US Dollar Index (DXY). While it's often assumed that these two assets are inversely correlated, a deeper analysis reveals that this is not always the case. This article explores the nuances of the XAU/USD and DXY relationship, demonstrating that they are not consistently correlated. Understanding XAU/USD and DXY XAU/USD represents the price of Gold in US dollars. Gold is traditionally viewed as a safe-haven asset, meaning its price tends to rise in times of economic uncertainty. DXY, or the US Dollar Index, measures the value of the US dollar against a basket of six major currencies: the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc. The index provides a broad measure of the US dollar's strength. The Assumption of Inverse Correlation The assumption of an inverse correlation between XAU/USD and DXY is based on the idea that when the dollar strengthens, it becomes more expensive to buy Gold, leading to a decrease in Gold prices. Conversely, when the dollar weakens, gold becomes cheaper, and its price tends to rise. However, this relationship is not as straightforward as it seems. Historical Data Analysis To understand the true nature of the relationship between XAU/USD and DXY, let's examine historical data. 1. 2008 Financial Crisis: During the 2008 financial crisis, both gold and the US dollar saw periods of appreciation. Investors flocked to the safety of both assets amid widespread market turmoil. This simultaneous rise contradicts the notion of a straightforward inverse correlation. 2. 2014-2016 Period: From mid-2014 to the end of 2016, the DXY experienced significant strength, rising from around 80 to over 100. During this period, gold prices also showed resilience, hovering around $1,200 to $1,300 per ounce. The expected inverse correlation was not evident during these years. 3. COVID-19 Pandemic: In early 2020, the onset of the COVID-19 pandemic triggered a sharp rise in both gold and the US dollar. The DXY spiked as investors sought the liquidity and safety of the US dollar, while gold surged as a hedge against unprecedented economic uncertainty and aggressive monetary policy actions. 4. Gold new ATH's in 2024: Even recently, if we examine the charts, we see that since the beginning of the year, XAU/USD has risen by 4000 pips, while the DXY is 4% above its price at the start of the year. Factors Influencing the Relationship: Several factors can disrupt the expected inverse correlation between XAU/USD and DXY: - Market Sentiment: Investor sentiment plays a crucial role. During periods of extreme uncertainty, both gold and the US dollar can be sought after for their safe-haven properties. - Monetary Policy: Central bank actions, particularly those of the Federal Reserve, can impact both the US dollar and gold. For instance, lower interest rates may weaken the dollar but boost gold prices as investors seek better returns elsewhere. - Geopolitical Events: Political instability, trade tensions, and other geopolitical factors can drive simultaneous demand for both assets, decoupling their traditional relationship. - Inflation Expectations: Gold is often used as a hedge against inflation. If inflation expectations rise, gold prices might increase regardless of the dollar's strength or weakness. Conclusion: While there are periods when XAU/USD and DXY exhibit an inverse correlation, this relationship is far from consistent. Various factors, including market sentiment, monetary policy, geopolitical events, and inflation expectations, can influence their behavior. Traders and investors should not rely solely on the assumed inverse correlation but rather consider the broader context and multiple factors at play. Understanding that XAU/USD and DXY are not always correlated can lead to more nuanced trading strategies and better risk management. In the complex world of financial markets, recognizing the limitations of assumed relationships is crucial for making informed decisions. Best Regards! Mihai Iacob
FX:XAUUSDEducation
by Mihai_Iacob
2
US economic recovery, good news for the global economyDXY: The USD index last week maintained an accumulation status around the 104.10-104.50 range and has not broken out yet. It is likely that the market will need information from this week's FOMC to have clearer trends. In the short term, it is expected that today, DXY will continue to accumulate around this price range, so you can consider buying USD when DXY retests 104.10. -- On July 25, the US Department of Commerce released a report showing that the world's largest economy grew by 2.8% in the period from April to June 2024 (twice as high as the previous quarter). This growth is considered solid, as the US Federal Reserve's (Fed) inflation control measures seem to be effective. Inflation, one of the key factors influencing the Fed’s monetary policy, is showing signs of cooling. The annual inflation rate fell to 3.2% in June, down from a peak of 9.1% last year. This development is believed to be the result of the Fed’s continuous interest rate hikes over the past year.
TVC:DXYLong
by TheLeader_WOLF
DXY Dollar Index Technical Analysis and Trade Idea In this video, we analyze the DXY Dollar Index. It's clear that the DXY has been exhibiting bearish momentum recently. However, it is currently range-bound, and we need to wait for the market to reveal its direction. My strategy involves monitoring the 15-minute chart for signs of a breakout. I am leaning bearish, but this will be confirmed later today as we approach the London and NY sessions. A breakout could present a trade opportunity, as described in the video. It's important to note that these observations are speculative and not a definitive forecast. Confirming specific price movements is crucial before considering any buying or selling decisions, as elaborated in the video. The video provides a comprehensive analysis of the current trend, market structure, and price dynamics. Remember, this educational content is designed to enhance understanding and does not guarantee outcomes. Trading inherently involves substantial risks, so employing robust risk management techniques is essential.
TVC:DXY
by fxtraderanthony
(DXY) Dollar - Break out pending from its consolidationThe DXY is currently in a consolidation phase, and I expect it to break out soon. Regardless of the direction, we have marked points of interest (POIs) that will help us capitalize on trading opportunities. - Scenario 1: Price Breaks Upwards If the price breaks above the consolidation, I anticipate it will fill the imbalance and tap into the supply zones marked on the 30-minute and 8-hour charts. - Scenario 2: Price Breaks Downwards If the price moves down, I expect it to mitigate the 16-hour demand zone. This zone appears to be a strong buy setup, likely pushing the dollar back up. There’s also an imbalance above this demand zone that needs to be filled. Overall, I am favoring an upward move, as this aligns with my bearish outlook on GOLD, EUR/USD, and GBP/USD.
TVC:DXYLong
by Hassan_fx
DXY- False break and strong reversal ahead? Last week, the DXY broke below important horizontal support. However, the next day, the index reversed its losses, followed by a bullish candle on Friday. This created a strong reversal candle on our weekly chart, making us wonder if the initial break was false. Now, the index is consolidating above this important horizontal support. A break above the current lateral consolidation could lead to an upward acceleration. Typically, after a false break, the asset moves in the opposite direction to test the next significant level. For the DXY, this sets a target in the 1.0650 zone.
TVC:DXYLong
by Mihai_Iacob
USD Sell-off Sinks to Multi-Month LowsUS Dollar declines eleven of the beyond 14 days- breaks multi-month uptrend / lows USD technical guide hurdle now in view- chance for rate inflection withinside the days in advance Resistance 104.08, ~104.40, 104.90s (key)- Support 103.49/60, 102.74/99 (key), 102.35 The US Dollar Index has plunged for eleven of the beyond 14 days (nowadays could entire 12) with a 3rd weekly decline taking DXY closer to preliminary technical guide. While the medium-time period outlook stays weighted to the downside, we're in search of viable rate inflection into fashion guide simply decrease withinside the days in advance for guidance. Battles traces drawn at the DXY short-time period technical charts into the near of the month. Review my state-of-the-art Weekly Strategy Webinar for an in-intensity breakdown of this US Dollar technical setup and more. Join stay on Monday`s at 8:30am EST. Technical Outlook: In final month`s USD Short-time period Outlook, we mentioned that USD become drawing near resistance at multi-week highs and that, “losses be restrained to the 200-DMA IF rate is heading better in this stretch with a near above 105.seventy one had to gas the subsequent leg in rate. Note that losses underneath 104.15 may want to see matters crumble alternatively quickly- tread gently on a take a look at of this guide IF reached.” The index rallied some other 0.8% withinside the following days with DXY reversing off the 2023 excessive-week near (HWC) at 106.10 into the near of June (intraday excessive registered at 106.13).
TVC:DXYLong
by Chart_MasterPro
DxyHello traders, I’d like to share my opinion on the DXY (U.S. Dollar Index) based on daily and 4-hour analyses. From a fundamental perspective, the dollar may strengthen; however, the upcoming U.S. presidential election could introduce instability. It's essential to exercise caution during this period. Monitor price action closely and consider potential volatility driven by political events. Adjust your trading strategies accordingly to manage risk effectively. If you have any further questions or need clarification, feel free to ask!
TVC:DXYLong
by somayehbasiri
DXY Dollar Index Technical Analysis and Trade Idea👉🔍 We can observe that DXY has been in a bearish trend recently. However, it has experienced a significant move into a key support zone. In the video, we discuss market structure, price action, and the trend. I'm expecting to see a potential reaction and an opportunity to go long if the price action unfolds as described in the video. As always, this is for educational purposes only and should not be considered financial advice. 📊✅
TVC:DXY
by fxtraderanthony
US Dollar Index Technical Forecast: USD Weekly Trade LevelsTechnical Outlook: In remaining month`s US Dollar Technical Forecast we mentioned that DXY was, “buying and selling into confluent guide this week on the 52-week transferring average / 38.2% retracement of the December rally at 103.96-104.26 – searching out a response / feasible rate inflection right here over the following few days.” The index grew to become better two-days later with USD surging greater than 2% off the June lows. The rally faltered at key resistance into the near of the month on the 2023 / 2024 high-week closes (HWC) at 106.10/11- the point of interest is on feasible inflection off this threshold with the long-bias susceptible whilst below. Initial weekly guide rests with the June low-week reversal near at 104.ninety five sponsored through key guide once more on the 52-week transferring average / 38.2% retracement, now 104.21/26- losses need to be constrained to this threshold for the January uptrend to stay viable. Broader, bullish invalidation regular at 102.87/99- a area outline through the 61.8% Fibonacci retracement of the December rally, the 2016 high-near, and the 2023 January low-week near (LWC). A topside breach / weekly near above 106.10 might be had to mark uptrend resumption with next goals eyed on the 50% retracement of the 2022 decline / 2023 highs at 107.18/34 and key resistance on the 100% extension of the 2023 advance / 61.8% retracement at 108.38/97- search for a bigger response there IF reached.
TVC:DXYLong
by Chart_MasterPro
DXY declined when Biden withdrew from the White HouseDXY: The USD index in today's session has reacted to a decrease and correction right after the information last weekend. Showing a bearish outlook in the context of Biden's withdrawal from the white house. The scenario in today's trading session is that DXY is expected to continue to weaken. Ace, please consider selling with USD US President Joe Biden introduced the stop of his re-election marketing campaign on July 21 (US time) and nominated Vice President Kamala Harris to update him because the Democratic presidential candidate. In the assertion on This week, he's scheduled to present a public speech. Being your president is the greatest honor of my life. Although I intend to run for re-election, I believe that for the best interests of my party and the country, I should stop and only focus on completing my presidential duties," Mr. Biden wrote. A few minutes after the above message, he wrote another message supporting Ms. Harris. "I chose Ms. Kamala Harris as my vice presidential candidate in the 2020 race. And it was the best decision I made," he continued.
TVC:DXYShort
by TheLeader_WOLF
Unlocking BTC's Potential: Deciphering the Role of DXYTo truly navigate BTC's complexities, one must first grasp the intricacies of DXY's movements. The U.S. Dollar Index (DXY) is on the brink of completing a double top pattern, possibly reaching a higher high (HH). In September 2022, when DXY last peaked, BTC simultaneously hit a low near $16,000. This historical correlation suggests a strong likelihood that DXY will break out from its current consolidation phase and ascend to a higher high, establishing a double top. When DXY begins to retreat, BTC is poised for its next substantial upward movement. This inverse relationship underscores the critical need to closely monitor DXY to accurately forecast BTC's trajectory.
TVC:DXYLong
by stavkog
DXY Heading Lower Toward Bitcoin Rally Zone The DXY is in a downtrending channel and despite today's small bounce based on MFG data, it's still looking like it will lose this key level in the coming days. This brief cool-off period before the 23rd when the ETH ETF is schedule to start trading would make sense and with BTC retracing from the strong sell order blocks at $66k which I've been talking about for over a week. The big question will be -- If BTC can break above the 5th attempt at the upper trendline resistance and close back above $72k and then a new new ATH over $74k. THEN I'll be convinced we do head hither. Until then, I recommend cautious optimism, taking profits along the way and being ready to get out of this market. The cycle low should be later in August, but we'll see.
TVC:DXY
by BrettFogle
DXY US Dollar Dominance Long-term forecastCurrent consolidation is coming to its end in the end of July 2024. US Dollar buying (= opening short positions) opportunity is open now. August 2024 will mark a major breakout and fast ascend of DXY topping at no higher than 112. Retest will follow bottoming at 105 (possible plunge down to 104) in January 2025. Next move up will happen in the first half of 2025 making Lower high compared to previous high of 112. Super-important month for all markets will not happen before August 2025. This time the world will decide wether it will go into the dark times of Greatest Financial Depression or it will abandon USD. If my forecast of August 2025 - March 2026 takes place, then USD will first nuke the world in 2026-2027 and then in 2027 USD will cease to exist.
INDEX:DXY
by discarding
4
US stocks and bond yields increased sharplyLong-time period U.S. bond yields rose on expectancies that Trump`s rules could boom authorities debt and inflation, at the same time as cryptocurrency shares additionally rose together with Bitcoin. Trump has delivered himself as a cryptocurrency advocate. Investors say a Trump victory may want to imply greater tax cuts and a greater comfortable regulatory environment. The S&P 500's strength region rose 1.6%. Impact from assassination and hobby rates On making a bet web website online PredictIt, the agreement for a Trump victory become buying and selling at sixty eight cents, up from 60 cents on Friday, with a capacity agreement of $1. Contracts for a Biden victory had been at 26 cents. The assassination in Pennsylvania on Saturday of Trump regarded to enhance his election chances. The 20-year-antique attacker's reasons continue to be a mystery, with the suspect killed and the FBI not able to decide the intentions in the back of the attack. “The marketing and marketing round this occasion is offering a boost,” stated Josh Wein, portfolio supervisor at Hennessy Funds. “But in latest days the inventory marketplace has increased. So that is a continuation of a sturdy rally from the second one 1/2 of of remaining week while we found out that there has been purpose to rejoice the concept that there might be one and now probably price cuts in stop of the year."
TVC:DXY
by TheLeader_WOLF