News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bearish
Wall Street
Bullish
Low
High
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
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Simplify your trading strategy with these four indicators here: https://t.co/fYgcMxImlP https://t.co/kkekBVYvhV
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/VwIkOMpvYl
  • “The UK and EU have agreed to return to the negotiating table to try to agree a post-#Brexit trade deal. But on Friday, a joint statement said ‘significant divergences’ remained.” - BBC News #GBP
  • Multiple time frame analysis follows a top down approach when trading and allows traders to gauge the longer-term trend while spotting ideal entries on a smaller time frame chart. Learn how to incorporate multiple time frame analysis here: https://t.co/Sy3g6HGLrR https://t.co/aRfVCRZut3
  • Forex sentiment analysis can be a useful tool to help traders understand and act on price behavior. Learn how to get the most out of understanding trader sentiment here: https://t.co/rJznrXkcYz https://t.co/uUh18lR3yK
  • The rising wedge is a popular reversal pattern that is predictive in nature and can give traders a clue to the direction and distance of the next price move. Incorporate the rising wedge in your trading strategy and learn more here: https://t.co/zTTk2WOrj9 https://t.co/q5oBalZieU
  • Both the S&P 500 and $EURUSD will enter the coming week with momentum to their back. What can trip up the rallies? What could keep them going? My overview for the week ahead: https://www.dailyfx.com/forex/video/daily_news_report/2020/12/05/SP-500-and-EURUSD-Rallies-Face-Different-Conviction-Questions-.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/YfEXEhkbhl
  • After the recent strength of EUR/USD, a period of consolidation is likely ahead of two critical meetings: of the European Central Bank and the European Council. Get your $EURUSD market update from @MartinSEssex here:https://t.co/Slu7tHo2a4 https://t.co/9am4szeia1
  • Triangle patterns have three main variations and appear frequently in the forex market. These patterns provide traders with greater insight into future price movement and the possible resumption of the current trend. Learn about triangles here: https://t.co/ZukLITx2KG https://t.co/gvkXqKDQyH
  • Continuation patterns can present favorable entry levels to trade in the direction of the prevailing trend. Use continuation patterns in your technical analysis here: https://t.co/TUVnO3bO1P https://t.co/vBLkMKjf4x
US Dollar Drops as Fed Beefs Up Backstop, FX Volatility Ebbs

US Dollar Drops as Fed Beefs Up Backstop, FX Volatility Ebbs

2020-03-24 18:20:00
Rich Dvorak, Analyst
Share:

US DOLLAR FORECAST: US DOLLAR EDGES LOWER AS THE FED DOUBLES DOWN ON STIMULUS EFFORTS, FX VOLATILITY PULLS BACK

  • US Dollar gives back gains with the FOMC liquidity spigot on full blast
  • USD price action weakens as risk appetite recovers on coronavirus stimulus hope
  • Currency volatility recedes from crisis-high readings and likely weighs on the US Dollar

The US Dollar is starting to pull back after soaring nearly 9% over the last two weeks. An astounding rise in the US Dollar Index since March 09 came on the back of risk-off sentiment and corresponding demand for safe-haven assets – like the US Dollar – due to the worsening coronavirus pandemic.

Traits of Successful Traders
Traits of Successful Traders
Recommended by Rich Dvorak
Discover the Traits of Successful Traders
Get My Guide

After unprecedented news released by the Federal Reserve yesterday, however, the US Dollar has begun to give back recent upside. The expanded Fed arsenal, like open-ended QE and allowing the FOMC to purchase US investment grade corporate bonds, has potential to weigh negatively on USD price action and broader US Dollar Index.

US DOLLAR INDEX PRICE CHART: 4-HOUR TIME FRAME (MARCH 05 TO MARCH 24, 2020)

USD Price Chart US Dollar Forecast DXY Index

Chart created by @RichDvorakFX with TradingView

That said, there could be a USD unwind underway with the US Dollar starting to experience modest weakness since its recent surge to three-year highs. The US Dollar pullback has held technical support provided by the 34-day exponential moving average and 23.6% Fibonacci retracement level of its latest bullish leg so far. This might suggest that the strong uptrend remains intact despite short-term downside.

Top Trading Opportunities in 2020
Top Trading Opportunities in 2020
Recommended by Rich Dvorak
Check out our Top Trading Opportunities
Get My Guide

FED BALANCE SHEET EXPLODES AS FOMC ACCELERATES ASSET PURCHASES

Fed Balance Sheet Chart Federal Reserve Total Assets

As the Federal Reserve beefs up its liquidity backstop and efforts to counter financial market distress, which stems from market panic in response to the coronavirus pandemic, the Fed balance sheet has started to explode. Total assets held by the Federal Reserve will likely balloon even further after the FOMC stated yesterday it will purchase US Treasuries and agency mortgage-backed securities “in the amounts needed.” This stands to increase bank reserves, liquidity and supply of US Dollars circulating the financial system, which might serve as a headwind to USD price action.

FX VOLATILITY RECEDES FROM RECORD HIGH DESPITE DEEPENING CORONAVIRUS PANDEMIC

US Dollar Price Chart USD Forecast FX Volatility Coronavirus

Chart created by @RichDvorakFX with TradingView

FX volatility is another major fundamental theme driving the direction of the US Dollar. Expected currency volatility in the Euro, Pound Sterling and Yen over the next 30-days has started to fall from extreme highs. This suggests that perceived risk, or uncertainty, surrounding these major currency pairs is starting to recede while market angst surrounding the coronavirus pandemic calms.

USD Forecast
USD Forecast
Recommended by Rich Dvorak
Download our latest comprehensive USD Forecast
Get My Guide

As market sentiment begins to improve and volatility drifts lower, largely due to hope that the flood of monetary and fiscal stimulus will offset economic fallout from the coronavirus, the US Dollar could continue its retracement lower. On the other hand, risk aversion and measures of volatility might snap back in an abrupt and aggressive fashion, which might slingshot the US Dollar to fresh year-to-date highs.

Read More: Gold Price to Resume Ascent as Fed Asset Purchases Balloon

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

DISCLOSURES