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
Bullish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • The inside bar pattern occurs regularly within financial markets. Incorporating the inside bar strategy can enhance a trader's market analysis. Find out how you can use it from @WVenketas here: https://t.co/E3EWOYTYNw https://t.co/aK98CEpfOH
  • Point 3 is not talked about enough. The bureaucratic - dare I say, Leviathan - in most universities is resulting in tuition prices skyrocketing without adding clear value to the students. https://t.co/WNZIORrfAk
  • Think #amzn will gap higher on Monday after Black Friday and the giant move to online shopping?
  • The exponential moving average (EMA) is a derivative of the simple moving average (SMA) indicator. Compared to the SMA, the EMA weighs recent price changes more heavily than later changes in price. Learn how to incorporate the EMA into your strategy here: https://t.co/w48c0xJXSX https://t.co/xFmhA7ZHqU
  • Traders in the Euro have a big decision to make this weekend: if EUR/USD hits 1.20, will it continue to advance, consolidate or fall back? Get your $EURUSD market update from @MartinSEssex here:https://t.co/8hAhguZcEA https://t.co/kwtatozp3z
  • The bullish engulfing candle is one of the forex market's most clear-cut price action signals for reversals and continuation. Learn more about this price action trading signal here: https://t.co/Yg6ecRZZNr https://t.co/9SdceNYUEK
  • The bull flag pattern is a great pattern to add to a forex trader's technical arsenal. Explosive moves are often associated with the bull flag. Learn more about the bull flag pattern here: https://t.co/yOEvLjKnct https://t.co/imv2PnapzH
  • Defensive stocks have proven critically important when navigating stock market volatility. Find out what are the most defensive stocks here:https://t.co/TMcbMALtbw https://t.co/mmldxxEtsc
  • Dollar Index has broken major uptrend support and risks accelerated losses into the December open. Get your $USD technical analysis from @MBForex here:https://t.co/Txo8l8S1f1 https://t.co/YLVzP95JH8
  • The MACD is an indicator that uses exponential moving averages (EMA) to determine trend strength along with entry points based on crossovers. Find out how you can use the MACD as a buy/sell signal here: https://t.co/qxnP99uqTQ https://t.co/tGVqSZ2zK3
Liquidity to Return with the Dollar Peering Over a Technical Cliff

Liquidity to Return with the Dollar Peering Over a Technical Cliff

2017-09-02 00:48:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

  • The DXY Dollar Index ended in the 'support zone' of a 2.5 year range after a 6 straight month decline - longest in 14 years
  • A number of fundamental themes can prove the next primary driver for the Dollar: political risk, monetary policy, risk trends
  • Market conditions may ultimately provide the most important ingredient for trend moving forward with a turn in liquidity

See how the DailyFX outlook for the US Dollar through the third quarter has fared and what critical themes and technical levels are still critical to the currency's next stages in the Third Quarter USD Forecast.

The Dollar has closed out this past week in one of the most uncomfortable technical positions possible. The DXY Index failed to make significant headway in turning the most recent leg of the 2017 bear trend and has in turn left the benchmark within sneezing distance of clearing the floor of a two-and-a-half year range low. This currency has been battered for good reason. After years of holding the title of 'best performing major currency,' it has seen its fundamental well dry up and speculators seek out distant opportunities elsewhere while they can still take advantage of the extreme complacency across the financial system.

Yet, in this quick change of fortune, we have also found the Greenback on the opposite extreme of the speculative scale. It is heavily oversold with a range of fundamental sources that could theoretically be tapped to support its recovery...should traders want to justify such a turn. At a critical technical boundary, with rising fundamental waves and at what is typically the seasonal turning point for liquidity; there is remarkable potential to be found in this crux of the financial system.

While the potential behind this currency and the market is exceptional, recent history should have taught us not to assume anything of the market's collective conviction. Speculation makes for irrational views, shifting focus and more distant projections. While the Dollar may be the most heavily oversold of the majors over the medium term, it can stretch even further under the right conditions (complacency, dovish Fed forecasts, etc). Therefore, having a bearish break scenario and trade options in mind is critical. My preferred candidates with the Dollar extended its slide would be USD/JPY for the risk implications and AUD/USD given the still-low level of the pair. However, should the pendulum finally swing back in the Greenback's favor, the EUR/USD is the most prominent opportunity. Behind that USD/CAD and USD/CHF are well positioned. We take a more focused and concise look at the Dollar for this weekend Quick Take video.

Don't commit to direction

Liquidity to Return with the Dollar Peering Over a Technical CliffLiquidity to Return with the Dollar Peering Over a Technical Cliff

To receive John’s analysis directly via email, please SIGN UP HERE

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

DISCLOSURES