US DOLLAR OUTLOOK: EUR/USD PRICE ACTION HINGES ON POWELL TESTIMONY, BIDEN STIMULUS DEAL

  • EUR/USD worth motion advancing towards month-to-month highs following its latest consolidation
  • DXY Index beneath strain as soon as once more as bulls give up the 50-day easy transferring common
  • US Greenback seems to be to Treasury yields, stimulus negotiations, and Fed Chair Powell for path
  • Sharpen your technical evaluation expertise or find out about implied volatility buying and selling methods!

The US Greenback is buying and selling on its again foot to begin the week. US Greenback promoting strain was felt throughout most main forex pairs like EUR/USD, GBP/USD, and USD/JPY. Regardless of tepid danger urge for food for equities in the course of the session, it seems that the most recent stretch of US Greenback weak spot largely follows the prevailing reflation commerce theme as sovereign yields climb and crude oil soars. On stability, the broader DXY Index dropped -0.3% to the 90.10-price stage.

US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (25 NOV 2020 TO 22 FEB 2021)

DXY Index Price Chart US Dollar Technical Outlook

Chart by @RichDvorakFX created utilizing TradingView

Closely skewed towards EUR/USD worth motion with a 57.6% weighting, the DXY Index has pulled again significantly over the past two weeks and simply notched a detailed beneath its 50-day transferring common. In the meantime, it seems to be like a head-and-shoulders reversal sample could have fashioned. One other push by US Greenback bears beneath the 90.00-handle might affirm a breakdown of neckline help. If materialized, this would possibly inspire follow-through decrease and produce the underside Bollinger Band into focus as a possible draw back goal. If US Greenback bulls can reclaim the 50-day transferring common, nonetheless, one other take a look at the 17 February swing excessive might come again into play.



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Change in Longs Shorts OI
Every day 14% 12% 13%
Weekly -12% -8% -9%

USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)

USD Price Chart Outlook US Dollar Implied Volatility Trading Ranges EURUSD GBPUSD USDJPY

In a single day implied volatility readings for choose US Greenback forex pairs have ticked greater and are perched above their respective 20-day averages. Though, when taking a look at 12-month percentile rankings, US Greenback implied volatility stay comparatively subdued. Occasion danger posed by Fed Chair Powell’s semi-annual congressional testimony scheduled to kick off Tuesday, 23 February at 15:00 GMT stands out as a possible catalyst for forex volatility.

It’s almost certainly that Chair Powell will reiterate the uber-accommodative stance of the Federal Reserve and wish for extra fiscal stimulus. Nonetheless, merchants may need an ear out for potential remarks on the FOMC’s willingness to maintain borrowing prices low amid the latest rise in Treasury yields. One other potential driver of US Greenback volatility contains progress on passing the $1.9-trillion fiscal stimulus bundle proposed by President Joe Biden. The US Greenback might agency a bit if speedbumps on the street to finalizing a stimulus deal are encountered, although which will show short-lived.

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— Written by Wealthy Dvorak, Analyst for DailyFX.com

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