-1696322578.png)
DXY Breaking Out
The US Dollar continues to March higher on Tuesday with DXY now at its highest level in a year. The rally is being fuelled by a relentless rise in yields on the back of the Fed’s recent tightening signal. At the September FOMC meeting, the Fed warned that rates would likely need to be increased again during this cycle and are expected to stay at elevated levels for longer than initially thought. The outlook was a firm pushback against those calling for early 2024 rate cuts and the market has since swiftly repriced its US rates view. Despite the market being in a net-long USD position, volumes are still not at overstretched levels suggesting there is plenty more room to run in the current rally.
US Labour Data Due Friday
Looking ahead this week, the next focus point for traders will be the incoming US labour reports on Friday. With the Fed citing the resilience of the US economy as one of the key drivers behind the shift in its outlook, traders will be looking to see how the labour market held up last month. If indicators remain strong, this will reinforce the Fed’s outlook keeping USD well supported near-term. Wages in particular will be a key input to monitor with any strength there likely to feed into upside inflation fears. Alternatively, if the NFP is seen undershooting forecasts on Friday this will likely cause some pause in the current USD rally.
Technical Views
DXY
The rally in the Dollar Index has seen the market breaking out above the 104.95 level with price now almost 8% up off the YTD lows. With the rally still well supported, reflected in firmly bullish momentum studies readings, the outlook remains focused on further upside near-term. 107.57 is now the key hurdle for bulls to overcome, with a break of this level opening the way for a move up to 109.18 next.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.