We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
Oil - US Crude
Wall Street
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.46% 🇨🇦CAD: 0.33% 🇦🇺AUD: 0.31% 🇬🇧GBP: -0.07% 🇯🇵JPY: -0.15% 🇨🇭CHF: -0.38% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/olQr1de3Ie
  • Italy will also receive EUR 91bln in loans under recovery plan
  • Reminder, Italian Economy Minister said at the beginning of the month he was confident the new European Recovery Fund will make available at least EUR 100bln..... BTPs off best levels https://t.co/f9Y6NRdmhn
  • Italy to be allocated EUR 81.8bln in grants Spain to be allocated EUR 77.3bln in grants France to be allocated EUR 39bln in grants under EU proposal
  • EU to Unveil Covid-19 Recovery Fund Plan, Swiss Franc Sinking - https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2020/05/27/EU-to-Unveil-Covid-19-Recovery-Fund-Plan-Swiss-Franc-Sinking.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #coronavirus #EU #CHF
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Wall Street: 1.69% France 40: 1.65% Germany 30: 1.61% FTSE 100: 1.51% US 500: 1.50% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/2TnK1MAjal
  • EUR/USD Price Rejected at Resistance, Now Eyes the Support - EUR vs USD Outlook more details in the link: https://www.dailyfx.com/forex/technical/home/analysis/eur-usd/2020/05/27/EURUSD-Price-Rejected-at-Resistance-Now-Eyes-the-Support-EUR-vs-USD-Outlook-MK.html?CHID=9&QPID=917714 https://t.co/1WxJZCpEbg
  • FTSE 100 +1.70% @ 6,162 - pushing back towards 50% Fib retracement and early March gap...#ftse #ftse100 @DailyFXTeam https://t.co/gC5fRZHKES
  • EU Commission to mobilise EUR 750bln for European recovery fund - EUR 500bln grants - EUR 250bln loans $EUR
  • BREAKING: Reports on the wires that the EU is considering an EUR750bn virus recovery plan. EU Commission to unveil details later today. #EUR #EuropeanUnion #COVID19
DXY Index Inside Day Forming as Risk Appetite Improves, Gold Slips

DXY Index Inside Day Forming as Risk Appetite Improves, Gold Slips

2019-01-18 14:18:00
Christopher Vecchio, CFA, Senior Strategist

Talking Points

- Across asset classes, including FX, investor demand for high yielding, risk-correlated assets continues to build; US equity markets are climbing a wall of worry, posting a higher daily close than open for 10 consecutive sessions.

- As the US government shutdown drags on, no end is in sight with US President Trump and Congressional Democratic leaders entrenched in their negotiation positions; US economic data releases delayed.

- Retail traders are fading short-term moves, with Euro longs increasing and British Pound longs decreasing.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides.

After a strong performance early on, the rest of the week has proven bland for the greenback. The US Dollar (via the DXY Index) has barely budged over the past 36-hours, closing Wednesday at 96.08 and clocking in at 96.05 at the time this report was written.

Amid the ongoing US government shutdown, traders were reminded late yesterday that Federal Reserve policy is still in play, despite all the attention on the fiscal side of things. Chicago Fed President Charlie Evans (a noted dove) said, “We’re just at a good point for sort of pausing… I’m not worried about inflation getting out of hand.” But why?

Aside from the sharp decline in energy prices since the start of October 2018, in the near-term, the US-China trade war and the shutdown could have a significant impact on the economy. “The longer it goes on, I think it becomes a little bit more of a challenge, and the uncertainties mean that people are going to delay making certain types of investments, and that’s not good for the outlook either.” Historically, uncertainty over the near-term policy horizon increases volatility in markets.

Higher Stocks, Weaker Bonds Weigh on Gold

As we said yesterday, “no news is good news.” Indeed, with the flow of US economic data stemmed, signs of the US economy slowing down at the end of Q4’18 have been pushed off the headlines. Focus remains on the larger thematic themes, making the market particularly sensitive to developments in the US-China trade war or shutdown. With respect the former, a report yesterday suggesting that the US was considering removing its tariffs on China helped spark a bid in risk assets, and despite the report being refuted, markets have not come back down.

That there are false reports regarding progress in the US-China trade war negotiations caters to market’s bias of desperately seeking any evidence for a resolution. US equity markets have continued to push higher amid said hopeful speculation, and in turn, traders have reversed their flows into US Treasuries. Accordingly, the combined trio of an elevated US Dollar, higher stocks, and stronger yields is particularly disconcerting for particular Gold.

Gold Price Chart: 4-hour Timeframe (June 2018 to January 2019) (Chart 1)

DXY Index Inside Day Forming as Risk Appetite Improves, Gold Slips

Gold’s near-term price forecast has weakened in the short-term. The symmetrical triangle that formed between January 3 and 17 gave way to the downside yesterday, clearing out the swing lows from January 10 and 15. Likewise, price has started to undercut the daily 8-, 13-, and 21-EMA envelope on the daily timeframe. Broadly speaking, what is still a neutral consolidation pattern is taking on a more bearish flavor.

Here, on the 4-hour timeframe, we can see that both daily MACD and Slow Stochastics are turning lower. Signs are pointing to Gold testing the broader range lows that have encompassed price action for the entirety of 2019; in the near-term, a move down to 1276.64 can’t be ruled out. However, a more significant bearish bias would not be appropriate unless a weekly close below 1276.64 was achieved.

DXY Index Price Chart: Daily Timeframe (June 2018 to January 2019) (Chart 2)

DXY Index Inside Day Forming as Risk Appetite Improves, Gold Slips

The technical picture has not changed in the past 36-hours for the DXY Index, which is still back in the near-three-month consolidation above 95.65 range support. Price continues to reject attempts to rise above the daily 21-EMA, having failed so far today after failing on Tuesday, Wednesday, and Thursday. Concurrently, both daily MACD and Slow Stochastics have turned higher (albeit still in bearish territory). The shift to a neutral outlook for the US Dollar remains valid heading into next week.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.