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
Mixed
Wall Street
Mixed
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/DJccj3qiig
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/UK4E7wD6s8
  • Copper is on track to make a sixth consecutive monthly gain as prices inch towards its all-time high. The global backdrop remains supportive despite a short-term pause in the rally. Get your market update from @FxWestwater here:https://t.co/STEYeIG042 https://t.co/R794ENkS3c
  • Retail trader signals still hint that the Dow Jones and S&P 500 may be at risk, placing the focus on year-long rising trendlines to see if dominant upside biases hold.Get your market update from @ddubrovskyFX here:https://t.co/lFpzIFNmzW https://t.co/FoHTLDJWJe
  • The path for the Japanese Yen seems to favor the downside looking at a majors-based index. USD/JPY may rise within its Ascending Channel, but there is some scope for a healthy correction. Get your market update from @ddubrovskyFX here:https://t.co/7XFJiCYYEM https://t.co/KfLyB2t1jP
  • The British Pound’s recent slip lower against its major counterparts may prove short-lived. Key levels to watch for GBP/USD, GBP/JPY, GBP/CHF and EUR/GBP. Get your $GBP market update from @DanielGMoss here:https://t.co/Y48cF2qi9M https://t.co/ia3Bgq0ZTp
  • Senate Democrats reach deal on jobless aid -BBG
  • The US Dollar faces its next key tests against ASEAN FX following gains in USD/SGD, USD/IDR, USD/PHP and USD/THB. Are the breakouts losing momentum? Get your market update from @ddubrovskyFX here:https://t.co/joPnWIcxEN https://t.co/4QAlUyD98V
  • Heads Up:🇨🇳 National People's Congress due at 00:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-03-06
  • Positive vaccine progress, fiscal stimulus hopes and an unperturbed Federal Reserve may open the door for long-term Treasury yields to continue pressing higher, and in turn weigh on gold prices. Get your market update from @DanielGMoss here:https://t.co/TdGhZ82s8r https://t.co/w6YS6Gl11K
US Dollar: Chasing A Bounce Could Be Expensive Below Election Gap

US Dollar: Chasing A Bounce Could Be Expensive Below Election Gap

Tyler Yell, CMT, Currency Strategist

Will Dollar weakness persist for the rest of 2017? Get a free DFX market forecast here

Talking Points:

  • DXY Technical Strategy: DXY remains in “sell the rips” mode below 98.20 (French Election gap)
  • DXY remains at the mercy of whether the EUR will rip or flip
  • EUR strength expected to continue per sentiment making DXY gains tough to come by

Dollar Bulls have come out from hiding in the last week on a relief rally that has the Federal Reserve to thank. While discussing the likelihood of Balance Sheet run-off in 2017, the Federal Reserve also said that another rate hike was expected this year followed by three more in 2018. Currently, when looking at Fed Funds futures contracts, the probability is weighted to a hold in September with announcements on Balance Sheet run-off, which is presumed to be USD-positive, and a rate hike in December if warranted by a turnaround in the data. If we had to label the conversations from recent Fed Presidents following the announced rate hike, I would apply the term, very cautious optimism. The Fed does have the benefit of hiking during the easiest money conditions per the Federal Reserve Bank of Chicago Financial Conditions Index since 2014, which is before they began hiking. However, the Citi Economic Surprise Index for the US Economy is rebounding from the weakest levels in six years. Economic surprise indices are subject to wildly optimistic or pessimistic expectations from economists, but they are telling none the less.

Another development in the market worth watching that likely has implications for the Fed, and the Dollar is the flattening US yield curve. Recently, the US5/30 Yield Curve where one would sell the 5-year UST and buy the 30-year UST had seen the spread reduce or flatten to the lowest level since December 2007, when the US Economy was entering into a recession that would eventually lead to the credit crisis of 2008.

Traders should note that as the yield curve flattens, it tends to mark speculative excesses and not the immediate pain that typically arises from yield curve inversion that many associate with recession. While the curve obviously needs to flatten before it can invert, to try to get in front of the trade, could lead to a painful outcome.

If you would be interested in seeing how retail tradersare bettingin key markets, see IG Client Sentiment here!

Join Tyler in his Daily Closing Bell webinars at 3 pm ET to discuss this market.

DXY trading below 98.20 keeps focus on downside extension targets @ 95.85-94.83

US Dollar: Chasing A Bounce Could Be Expensive Below Election Gap

Chart Created by Tyler Yell, CMT

IG Client Sentiment Highlight: EUR (57.6% of DXY) Sentiment favors further DXY downside

US Dollar: Chasing A Bounce Could Be Expensive Below Election Gap

EURUSD: Retail trader data shows 30.9% of traders are net-long with the ratio of traders short to long at 2.24 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.05975; price has moved 5.3% higher since then. The number of traders net-long is 1.4% lower than yesterday and 7.1% lower from last week, while the number of traders net-short is 2.2% lower than yesterday and 3.4% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias. (Emphasis mine)

---

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

To receive Tyler's analysis directly via email, please SIGN UP HERE

Contact and discuss markets with Tyler on Twitter: @ForexYell

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

DISCLOSURES