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Will the NZD rally or reverse after the RBNZ rate decision? The NZD/USD has been on an uptrend since mid-October. However, this rally may be on a temporary halt as the pair hits the upper trend line on its downward channel, as shown below in the daily timeframe chart. For now, the long-term downtrend, since the start of the year, is still intact and could signal a possible reversal for the short-term rally for the New Zealand dollar. Fundamentals will be playing a huge part in the direction of the NZD/USD this week. The market is showing some risk aversion due to renewed lockdown worries in China and a possibility that the US Federal Reserve will not let up on its aggressive tightening cycle in the upcoming FOMC meeting. The focus for now, however, is the interest rate decision from the Reserve Bank of New Zealand (RBNZ) this Wednesday. Markets are widely expecting a 75-basis-points hike, but a 50-basis-points hike is still entirely possible, thus some volatility might be injected in the markets if expectations are not met. Back to the technical perspective, there is a double top formation with a gravestone Doji candle as the price fails to create a higher high above the 0.62000 area in the 4-hour chart. Using the Extreme Trend Reversal Points indicator (ETRP), we can identify if there is a probable reversal in this zone before the RBNZ rate decision. The triangle arrow from the ETRP signals that a possible reversal may happen in this area. However, considering the moving average, which is color-coded according to the trend strength, which is mainly green for extreme bullish, lime for bullish, silver for range, orange for bearish, and red for extreme bearish, is still indicating that the trend is still bullish. Traders who are looking for a sell signal confirmation could wait for the ETRP to change its moving average color to bearish before considering an entry.
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by BlackBull_Markets
How did the market react to soft US inflation? Huge, unexpected moves occurred across several markets after the US inflation report for October was released last Thursday. For those that missed the news, US inflation came in softer-than-expected at 7.7% (vs. 8.0% expected, and down from 8.2% in the previous month) suggesting that the US Federal Reserve's policy tightening has started to work its magic, and they might be able to start slowing the pace of its hikes moving forward. The market is firming toward a 50-basis-points rate hike from the US Fed in November now, after four consecutive 75-basis-points rate hikes. This is a scenario that some assets have rejoiced, and others lamented. Confidence in the US dollar, as the only buy, has finally shown signs of wavering after the inflation print. The upside potential for the US dollar may be muted moving forward but we might have to wait until we see a sustainable trend in inflation cooling. Even so, DXY experienced its worst week since March 2020, falling almost 4% against a basket of its trading partners last week. More interestingly, the DXY fell -2.1% on Thursday alone, its largest daily loss in 13 years. The forex pair that gained the most against the US dollar was the Japanese yen, up more than 5% on the week, and now trading comfortably below 140. The pound, euro, Aussie dollar, and NZ dollar all gained between 4% and 3% at the same time. With the weakening US dollar, gold and silver climbed 5.4% to $1,770 per ounce (3-month high) and 4.1% to $21.7 per ounce (5-month high), respectively on the weekly timeframe. Moving in line with metals, and against the US dollar, US stocks experienced a significant rally on Thursday and Friday. Thursday’s rally was its largest in 2 years with the tech heavy Nasdaq100 surging a phenomenal 7.2%, outpacing the S&P500 and the Dow gains. The Nasdaq was supported by a cratering in the US 10-year Treasury yields, which fell 30-basis-points to 3.8%.
TVC:DXY
by BlackBull_Markets
Is USD still a buy ahead of US CPI So many factors are affecting the currency markets right now that it can be hard to get your head around them all. Activity is definitely centered on the US. Last week, we had the US Federal Reserve’s interest rate decision and US Non Farm Payrolls which is still lingering in the minds of traders. The latter jobs data is pointing to a slowdown in the Us economy, but it still beat market expectations by a fair margin (260K jobs vs 200K expected). This week we have US midterm elections, the results of which will help set the fiscal policy direction of the US for the next few years. Markets took their expectations from polling leading up to the voting, and republican ‘red wave’ was expected to materialise, removing the democrat's slim majority in the US House of Representatives and Congress. As of writing, the red wave has turned out to be more of a 'red ripple’, with the elections still in contest. To cap off these major market events, we have the US inflation data dropping very early Friday morning (UTC +13) and the Michigan Consumer Sentiment Index on Saturday So, with all these events swirling around, is it still a good time to buy USD and sell EUR? It might all come down to whether there is any emphatic break of the pair above 1.0100 to put off the selling sentiment. As it stands, the EUR/USD does appear to be temporarily supported from falling too far below parity, but this doesn’t mean that buyers are there to take it higher, especially when we zoom out and consider the longer-term trend of the pair, and the resistance it has recently encountered twice at 1.0100. Further downside might rely on a break below 0.9800 (for a weak signal) and 0.9550 (for a strong signal) moving forward.
by BlackBull_Markets
1
The aftermath of the feds fourth 75bps hike; DXY and DOW JONESIt's now official; the US Federal Reserve has enacted its fourth consecutive 75-basis-points rate hike, bringing its benchmark rate to the 3.75% - 4.00% range, which is the highest it has been since January of 2008. The markets reacted quite mildly to the rate hike at first, due to it aligning with exactly what the market was expecting for the past few weeks. Expectations strengthened for another 75-basis-points (typically an outsized hike) after September's hotter-than-expected inflation reading that arrived in October. The mild reaction soon gave way to volatility, as US Federal Reserve Chairman Jerome Powell began to deliver his address that customarily follows an interest rate decision. Investors were intensely curious about this address as it is an opportunity to glean information about why the decision was made and how the bank is thinking about future hikes. What they were specifically looking out for included statements concerning the intensity and pace of rate hikes moving forward, concerns held for the state of the US economy, and responses to recent data drops. What we learned from Powell’s address Stocks actually spiked at the onset of Powell’s address, buts quickly gave up gains when it became apparent that Powell is not seriously considering a slowdown in the pace of its rate hikes just yet, like that which has been seen in Canada and Australia. It will be interesting to see where US stocks head in November after recording huge bumps in October, which in part has been attributed to an expectation that the Fed might slow its pace. For one, The Dow Jones Industrial Average recorded its best month since 1976, climbing more than 13%. Powell noted that he expects to start talking about slowing the pace with his colleges within the next two meetings. The special note that it could be within the next ‘two’ meetings is what lent it a veil of non-urgency. Perhaps the most important note of the address, Powell confirmed that the bank has revised up its expectation for peak interest rates from 4.6% to 5.0% after digesting the data that had been released in October. This note has helped put the US dollar index (DXY) back on track to its 20-year high of 114.00 recorded in September. Much like stocks, the DXY’s reaction reversed its direction drastically after the market caught wind of the Feds revised terminal rate. Before the reversal, the DXY was on its way down to 110.00, before spiking to almost 112.00.
BLACKBULL:DX.F
by BlackBull_Markets
Reversal set for last week’s worst performing pairs? USD/PKRBy the close of last week's trading session, the top 3 worst performing currency pairs came out to be the USD/PKR (-4.91%), NZD/USD (-2.61%), and USD/SEK (-2.04%). To help determine the direction that these pairs will take this week, we will use the Hacolt Indicator (Vervoort Heiken-Ashi Longterm Candlestick Oscillator). Will the pairs continue to slide, or are they primed for a rebound in response to the huge selloffs? The Hacolt Indicator helps to confirm the strength of trends. When the indicator presents green, the market is expected to trend upward, and when it is red, it is expected to trend downwards. It can also be used as a trend switch signal, suggesting a potential turnaround or a pullback on the current trend. Starting with the USD/PKR, just like the USD/SEK, the Hacolt Indicator shows a green bullish signal. However, strong resistance at 240.00 created a double top formation on the daily timeframe, which resulted in last week’s downward move for the pair. The price may head towards 224.00 and even 217.50 if the Hacolt indicator gives a red bearish signal this week. For the NZD/USD, the Hacolt Indicator, on the other hand, shows a red signal which indicates that the pair is still on a downtrend. The trading candle last Friday also ended closing below the 0.5626 support area, which may suggest that the price for this week for the NZD/USD would likely continue going down, potentially targeting the lows from March 2020 at 0.5469. Lastly, the USD/SEK, and the Hacolt Indicator shows a green signal on the daily timeframe, possibly indicating that the uptrend is still in favor. This indication contrasts with the current downside move in the candles. If the Hacolt Indicator gives a bearish red signal this week, we might see the price retesting the 10.80 price level. A final target might be around the 10.45 support area. Overall, the trend is still bullish though, so look out for support formation in key psychological area around 11.00.
by BlackBull_Markets
Will the hawkish message continue with today's FOMC? Plenty of attention will be on today's FOMC meeting. Traders are looking for a ¾ or point increase from the Fed today, taking rates to 3.25%. This is what the market expects: anything more and USD positive, anything less USD negative. That's a simple look. The projections and the statement will be the key parts traders will be looking at. We all saw the market's reaction to last Tuesday's CPI surprise, and it not only revived the USD but also nailed stock indexes, risk currencies and crypto. Traders will be looking to see any inflation surprises in the projections, what the Fed thinks about the current position, and how far the rates cycle may need to go. If any of these remain on the hawkish side, we could see further gains from the USD and further losses on risk markets, including crypto. Fed funds futures terminal rate has also been raised to 4.5% by April, increasing from 4.0% before last Tuesday's CPI report. Looking at the USD index. If influences continue to support price we could see a new breakout above 110.30 resistance, continuing the current fast trend. The USD index has formed a new HL after the CPI spike got the current fast trend back on track. We want to see resistance beaten to confirm that the trend is truly underway, and a break of the September high would further that confirmation. The Nasdaq has performed the worst out of the three main US indexes since the 16th of August. The NDX100 CFD index, which tracks the Nasdaq, dropped close to 15% since that high. Some short-term support is starting to set up on the NDX100, but if we see hawkish pressure resume, we would be looking for a move back to 11,450, an area that has shown demand back in July. The FOMC projections, funds rate and statement will be released at 2:00 pm EST, with the Press conference to follow at 2:30 pm. We love to hear from you so please feel free to drop us a comment. We also run weekly webinars with guest analysts.
EIGHTCAP:USDX
by Eightcap
DXY monthly forecast ahead of NFP At August’s close, the USD can be said to have performed exceedingly well against its trading partners. The DXY climbed 3.2% over the month. Now it heads into a very important Non Farm Payrolls result, and investors will be looking for clues as to the USD’s next move. The Non Farm Payroll data for August is released on September 2, 2022, and is perhaps more eagerly anticipated than normal. The reasons for this are detailed in Monday's market review Pound and gold head lower before NFP data. The worst performing USD pair over the past month has been the Pakistani rupee (USD/PKR), which fell by more than 8.0%. But this movement against the USD was far from the norm. The movements of other currencies include: GBP/USD, fell by 5.2% NZD/USD, fell by 2.9% EUR/USD, fell by 2.1% AUD/USD, fell by 1.9% USD/INR, rose by 1.4% USD/RUB, rose by 1.7% USD/CAD, rose by 2.1% USD/CHF, rose by 2.5% USD/JPY, rose by 5.3% We can look at the DXY chart on the monthly timeframe to try to ascertain whether the USD can sustain this upside momentum. Thus far, technical analysis is maybe suggesting that the US dollar still has plenty of space to move toward the upside. The monthly candle’s 107.500 resistance area, which is now broken, opens traders to scope out higher levels of resistance including 110.00 and 116.500. The former of which the Dollar index is currently butting up against. Further afield, traders may want to keep the 2-decade high of 120.000 in the back of their mind. Such a lofty prediction is seemingly backed-up by an upcoming US Federal Reserve interest rate decision. On the other hand, traders should be wary as well. The price could also create a monthly pullback as the Williams %R indicator is currently planted in the extreme upper range above 20%, which indicates that the price might be in overbought territory.
TVC:DXY
by BlackBull_Markets
$Index AB=CD, (C confirmed) Falling WedgeIn my last idea about DXY (see related ideas), I proclaimed that we might have the possibility of the formation of AB=CD pattern owing the accumulating Falling wedge. But we had a variable of point C in AB=CD, we did not know where/when it might appear. After the false break low on Friday and the rejection from bottom it turned out to be a perfect hammer on Daily candle. For now, as a result of the third failed attempt to break the wedge we recognize 107.3 as point C. We can now expect DXY to finally break high and linger on to the yearly resistance one more time. Breaking higher than the red line (109) we will be one step forward to be expecting 112, which is the target price for the AB=CD pattern. Monday open is likely to occur above the wedge so we are beyond the point where DXY might break lower, for now. However, the only variable that remains is the result of the yearly high resistance at 109. If the price manages to break through it, we sure can expect 112 in the succession. Triggers for the move: 1- Hawkish FEDs 2- Result of Jackson Hole Symposium 3- Expected Interest rate hike in September 2022 by The Federal Reserve
CAPITALCOM:DXYLong
by Uzi-Trades-Forex
4
USD/CAD Bullish Momentum ContinuesHello Traders USD/CAD is on bullish momentum. We believe that this pair is going to continue upward but before, it needs some corrections. Here is why we long USD/CAD: 1- RSI is on Uptrend 2- Short term momentum is upward. 3- Price has a big resistance between 1.30500-1.30800. This zone will drag price toward itself. 4- USD sentiment is positive. If you like it then Support us by Like, Follow and Share. Thanks For Reading Team Fortuna -RC (Disclaimer: Published ideas and other Contents on this page are for educational purposes and does not include financial recommendation. Trading is Risky, so before any action do your own research.)
Long
by FortunaInvestments