US DOLLAR OUTLOOK: EUR/USD PRICE ACTION HINGES ON POWELL TESTIMONY, BIDEN STIMULUS DEAL
- EUR/USD value motion advancing towards month-to-month highs following its current consolidation
- DXY Index underneath stress as soon as once more as bulls give up the 50-day easy shifting common
- US Greenback appears to Treasury yields, stimulus negotiations, and Fed Chair Powell for route
- Sharpen your technical evaluation abilities or find out about implied volatility buying and selling methods!
The US Greenback is buying and selling on its again foot to begin the week. US Greenback promoting stress was felt throughout most main foreign money pairs like EUR/USD, GBP/USD, and USD/JPY. Regardless of tepid threat urge for food for equities through the session, it seems that the most recent stretch of US Greenback weak spot largely follows the prevailing reflation commerce theme as sovereign yields climb and crude oil soars. On stability, the broader DXY Index dropped -0.3% to the 90.10-price stage.
US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (25 NOV 2020 TO 22 FEB 2021)
Chart by @RichDvorakFX created utilizing TradingView
Closely skewed towards EUR/USD value motion with a 57.6% weighting, the DXY Index has pulled again significantly over the past two weeks and simply notched an in depth beneath its 50-day shifting common. In the meantime, it appears like a head-and-shoulders reversal sample could have shaped. One other push by US Greenback bears beneath the 90.00-handle might verify a breakdown of neckline help. If materialized, this would possibly inspire follow-through decrease and produce the underside Bollinger Band into focus as a possible draw back goal. If US Greenback bulls can reclaim the 50-day shifting common, nonetheless, one other have a look at the 17 February swing excessive might come again into play.
| Change in | Longs | Shorts | OI |
| Day by day | 14% | 12% | 13% |
| Weekly | -12% | -8% | -9% |
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
In a single day implied volatility readings for choose US Greenback foreign money pairs have ticked greater and are perched above their respective 20-day averages. Though, when taking a look at 12-month percentile rankings, US Greenback implied volatility stay comparatively subdued. Occasion threat posed by Fed Chair Powell’s semi-annual congressional testimony scheduled to kick off Tuesday, 23 February at 15:00 GMT stands out as a possible catalyst for foreign money volatility.
It’s almost definitely that Chair Powell will reiterate the uber-accommodative stance of the Federal Reserve and want for extra fiscal stimulus. Nonetheless, merchants may need an ear out for potential remarks on the FOMC’s willingness to maintain borrowing prices low amid the current rise in Treasury yields. One other potential driver of US Greenback volatility contains progress on passing the $1.9-trillion fiscal stimulus package deal proposed by President Joe Biden. The US Greenback might agency a bit if speedbumps on the street to finalizing a stimulus deal are encountered, although that will show short-lived.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
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