Is this the turning point for DXY?
DXY is right at resistance. Rate hikes are behind us. The Fed is going to cut starting today, as many as 7 times by April next year. Is this the turning point for DXY?
Sweet sweet coincidence we have these come together today:
- DXY at resistance (see chart below)
- Last day of this month
- FOMC meeting and rate announcement in 9 hours
- Plenty of controversy whether there is going to be a 25-points ‘insurance’ hike or a 50-points ‘shock and awe’ into what POTUS Trump and Fed emphasise was the best American economy ever (really?)
From the chart:
- 97.711 is the highest point for DXY for the whole of 2018
- 97.711 was breached this year – highest 98.371 but never closed above at month-end – a sign of resistance
Putting it together
It is hard to see any driver that would push DXY higher when market is pricing up to 7 rate cuts by April 2020 according to CME FedWatch Tool. Therefore how DXY closes today on the last day of July combined with what will come out of the Fed will drive action for August. Right now I place my bet on scenario number 1 ‘test-resistance-and-fall’ or scenario number 2 ‘fake-break-then-fall’ as likely to happen.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
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