US DOLLAR OUTLOOK: USD PRICE ACTION STILL UNDER PRESSURE, CAN BULLS DEFEND 50-DAY MOVING AVERAGE?
- US Dollar edged another -0.2% lower on Wednesday gauging by the broader DXY Index
- EUR/USD price action has climbed alongside ten-year Bund to Treasury yield spreads
- Retail sales data due for release could drive currency volatility and US Dollar strength
The US Dollar weakened -0.2% on Wednesday and has now declined seven out of the last ten trading sessions. This stretch of US Dollar selling pressure, which seems to correspond with relatively subdued Treasury yield volatility, leaves the DXY Index down -1.7% on the month. US Dollar bulls might stage a rebound attempt, however, as nearside support provided by the 50-day simple moving average shows potential of spring-boarding the DXY Index back higher.
DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (24 DEC 2020 TO 14 APR 2021)
Chart by @RichDvorakFX created using TradingView
This technical support around the 91.50-price level is underpinned by the bottom Bollinger Band as well. In addition to the mid-point retracement of its year-to-date trading range, the 04 February swing high and 18 March swing low also roughly highlight this zone of confluent support. US Dollar bears could look to defend this area of buoyancy and send the DXY Index recoiling toward its 20-day simple moving average. Invalidating this support level could encourage US Dollar bears to make a deeper push to test the ascending trendline that extends through the 05 January and 22 February lows.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
US Dollar volatility is expected to accelerate on Thursday judging by overnight implied volatility readings across major currency pairs. EUR/USD and AUD/USD could come into focus in light of high-impact event risk outlined on the DailyFX Economic Calendar. The release of US retail sales and Australian employment data stand out most prominently.
| Change in | Longs | Shorts | OI |
| Daily | 1% | 8% | 3% |
| Weekly | 7% | -10% | -1% |
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
