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
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Mixed
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
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
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/cQwbeZ6Feq
  • #Oil prices saw a reprieve to the recent selling pressure but remain at risk while below downtrend resistance. Here are the levels that matter on the #WTI technical chart. Get your #commodities update from @MBForex here: https://t.co/CcXsF3JCMH https://t.co/RUmS1cX52v
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/boEI8RuQdC
  • The growth-linked New Zealand Dollar may rise on the upcoming #RBNZ rate decision following rosy economic data. However, downside potential in the S&P 500 could offset $NZDUSD gains. Get your #currencies update from @ddubrovskyFX here: https://t.co/LfCe6C6G3P https://t.co/kUeBxxeaEf
  • It was a quiet week in Aussie as $AUDUSD put in its second consecutive week of indecision. But taking a more granular look highlights the potential for a reversal scenario. Get your #currencies update from @JStanleyFX here: https://t.co/PPK20nubAf https://t.co/0nfmRRFNnz
  • The S&P 500 pushed the market's comfort with a head-and-shoulders pattern through Friday's close. What should we look for in technical patterns, overlapping fundamental tides and speculative positioning for the likes of $EURUSD next week? https://www.dailyfx.com/forex/video/daily_news_report/2020/09/19/EURUSD-Pressure-Building-while-Anxious-Traders-Weigh-Did-SP-500-Break.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/lgVJVwi8th
  • Sterling remains trapped by overarching fundamentals drivers and both $GBPUSD and $EURGBP are going to have to wait until the Brexit dust settles. Get your #currencies update from @nickcawley1 here: https://t.co/vF1K1cy0nd https://t.co/NSA7qiQihc
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:https://t.co/1oygcFMFNs https://t.co/d9EmTOHyTv
  • 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/A4dqGMPylo https://t.co/xqbUxwWgTZ
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/Gi8LHCT5sB
A Dollar Recovery That Gains Traction or Flounders

A Dollar Recovery That Gains Traction or Flounders

2017-10-04 01:21:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

  • The Dollar's tentative recovery from a 2017-long tumble began nearly a month ago and progress is slow to develop
  • A hawkish Fed signal last month and Janet Yellen's remarks provided lift beyond mere moderation which prevailed
  • Motivation is needed to forge meaningful momentum, but can Yellen or NFPs provide this week?

Speculative futures traders are holding a heavy, net-short Dollar exposure which is both fitting and a contrarian interest among traders. See how retail FX traders are positioned for pairs like EUR/USD, GBP/USD and USD/JPY on the DailyFX Sentiment Page.

Since marking a two-and-a-half year low early in September, the Dollar has attempted a broad recovery to claw back serious ground lost throughout 2017. To this point, however, progress has been limited and conviction appropriately reserved. To gauge conviction and thereby trade potential, we should evaluate the motivation that can support the Greenback's still-nascent recovery effort. Technical traders may just wait out the momentum and assign a probability according to historical patterns or refer to market mechanics - such as speculative positioning in the COT figures for futures or retail FX measure on DailyFX. However, at the emergence and end of trends, the emphasis on fundamentals is more valuable.

There are two general means for which a trend changes through fundamental channels: either the driver that had motivated the previous course starts to reverse its polarity and motivates the same change in the asset. Otherwise, we find a more abrupt change in focus. The latter case is oftentimes the source of more dramatic reversals; however, we haven't seen a change in fundamental primacy for the Dollar such as a panicked demand for an absolute haven. Instead, the Dollar's rebound seems to be arising from the same source as its tumble through the year: monetary policy. Having seen its appeal as the first and only major central bank working to normalize policy recede as the Bank of Canada hiked twice, the Bank of England set out expectations for a 2017 hike and the European Central Bank was seen moving in 2018; the Dollar's advantage has shrunk. After the strong discount though, the Dollar seems in a better position to recover some lost ground...if motivated.

Over the past two weeks, there have been distinct fundamental triggers promoting the Dollar's rise. First the Federal Reserve's September policy meeting offered up a clear commitment through the SEP for a further (third) rate hike later this year that would expand the Dollar's yield advantage as well as signal the start of the QE reduction program. Real progress was made however when the Fed Chair Yellen remarked that the group should make sure not to move too slowly on normalizing policy. Those remarks catalyzed the critical break from the DXY Dollar Index and EUR/USD. Yet, since those remarks last week, conviction has again flagged - though gained ground has not necessarily been relinquished. The Dollar's rebound can find another charge or flounder, and drive heavily rests with subsequent fundamental event risk. Yellen's remarks on Wednesday or NFPs on Friday may cater to the correct theme. I already have exposure to EUR/USD and GBP/USD; but there are other Dollar pairs that may do well in either bullish or bearish positions. See what can drive the Dollar and what pairs look well positioned in today's Quick Take Video.

A Dollar Recovery That Gains Traction or FloundersA Dollar Recovery That Gains Traction or FloundersA Dollar Recovery That Gains Traction or Flounders

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