8 Aug 2013
DXY struggling short-term while the next big move looks to be higher
FXstreet.com (Barcelona) - The US Dollar Index (DXY) has been getting bludgeoned by relative strength in other currencies over the last several trading sessions.
DXY down as traders wait for Bernanke to confirm colleagues’ sentiment
The Federal Reserve in the US is going to begin its proposed “tapering” of monthly bond purchases later this year – that much is nearly a certainty (barring any exogenous events). There is even a fairly high degree of confidence that the new course of action will begin in the September - October time frame. So, why is the DXY not reflecting what may be a serious rise in interest rates? Is the marketplace waiting for hawkish sounds to start emanating from Mr. Bernanke himself? Perhaps – especially since his dovish comments in early July directly contradicted similar tapering talk back then.
All of that is clearly tempering the relative strength in the US Dollar, which is all that has been required to send the DXY plummeting as it has recently when Europe, Japan, Britain and the other “major” currencies are showing good relative strength in the short-term.
Technical outlook for the DXY
Technicians say the downside trading target for DXY may now be 80.51 after 81.63 support was broken. On the way down there, 81.13 – another possible Fibonacci price projection / support – will be tested. Once the anticipated low is established, technicians are calling for a sharp move to the upside with an ultimate target of at least 85.00. Shorter-term resistance for DXY comes in at the 7/31 closing low at 81.45 and is backed up by the 7/24 peak at 82.42.
DXY down as traders wait for Bernanke to confirm colleagues’ sentiment
The Federal Reserve in the US is going to begin its proposed “tapering” of monthly bond purchases later this year – that much is nearly a certainty (barring any exogenous events). There is even a fairly high degree of confidence that the new course of action will begin in the September - October time frame. So, why is the DXY not reflecting what may be a serious rise in interest rates? Is the marketplace waiting for hawkish sounds to start emanating from Mr. Bernanke himself? Perhaps – especially since his dovish comments in early July directly contradicted similar tapering talk back then.
All of that is clearly tempering the relative strength in the US Dollar, which is all that has been required to send the DXY plummeting as it has recently when Europe, Japan, Britain and the other “major” currencies are showing good relative strength in the short-term.
Technical outlook for the DXY
Technicians say the downside trading target for DXY may now be 80.51 after 81.63 support was broken. On the way down there, 81.13 – another possible Fibonacci price projection / support – will be tested. Once the anticipated low is established, technicians are calling for a sharp move to the upside with an ultimate target of at least 85.00. Shorter-term resistance for DXY comes in at the 7/31 closing low at 81.45 and is backed up by the 7/24 peak at 82.42.