U.S. Dollar Index dynamics scenarios on October 19, 2023
October 19, 2023 4:22 pm
The events of the current week, despite the deteriorating geopolitical situation worldwide, do not seem to have a very positive impact on the dynamics of the dollar, judging by the black candles on the weekly and daily charts of the DXY index (CFD #USDX in the MT4 terminal). Today’s decline, perhaps, can be attributed to the expectations of the upcoming (at 16:00 GMT) speech by Federal Reserve Chairman Jerome Powell.
It’s worth noting that the FOMC meeting will be held on October 31–November 1, and so far, the dollar retains its strength ahead of this event. Nevertheless, a lot may depend on Powell’s statements today for the future dynamics of the dollar.
In general, market participants are expecting “bullish” signals from Powell regarding the dollar and the near-term prospects of the Fed’s monetary policy. However, they are also trimming some of their long positions in case Powell fails to convince the markets of the Fed’s strong commitment to a tightening policy. If Powell restricts his statements to maintaining the current policy parameters and rules out further interest rate hikes, the dollar may sharply decline.
From a technical standpoint, the dollar index (CFD #USDX) is trading in a sustainable bull market, medium-term—above the key level of 104.00 (200 EMA on the daily chart), and long-term—above the key support levels of 101.40 (144 EMA on the weekly chart), 100.15 (200 EMA on the weekly chart), 100.00.
In this situation, despite the corrective decline, long positions remain preferable for now.
A signal for new long positions can be a breakout of today’s high at 106.64 and the local resistance level, marking the upper boundary of the recently formed range between the levels of 106.75 and 105.50. The nearest growth targets will be the local resistance levels of 107.32, 107.80, and 108.00.
In an alternative scenario, a break below the key support level of 104.00 will return the DXY to the medium-term bear market zone. The first signal to start implementing this scenario and opening short positions may be a break of the important short-term support level at 106.29 (200 EMA on the 1-hour chart) and yesterday’s low at 105.98, with confirmation coming from a break below the crucial short-term support level at 105.60 (200 EMA on the 4-hour chart), the lower boundary of the range, and the support level of 105.50.
A break below the key support level of 100.00 in the event of further DXY decline will create prerequisites for its entry into the long-term bear market zone.
The events of the current week, despite the deteriorating geopolitical situation worldwide, do not seem to have a very positive impact on the dynamics of the dollar, judging by the black candles on the weekly and daily charts of the DXY index (CFD #USDX in the MT4 terminal). Today’s decline, perhaps, can be attributed to the expectations of the upcoming (at 16:00 GMT) speech by Federal Reserve Chairman Jerome Powell.
It’s worth noting that the FOMC meeting will be held on October 31–November 1, and so far, the dollar retains its strength ahead of this event. Nevertheless, a lot may depend on Powell’s statements today for the future dynamics of the dollar.
In general, market participants are expecting “bullish” signals from Powell regarding the dollar and the near-term prospects of the Fed’s monetary policy. However, they are also trimming some of their long positions in case Powell fails to convince the markets of the Fed’s strong commitment to a tightening policy. If Powell restricts his statements to maintaining the current policy parameters and rules out further interest rate hikes, the dollar may sharply decline.
From a technical standpoint, the dollar index (CFD #USDX) is trading in a sustainable bull market, medium-term—above the key level of 104.00 (200 EMA on the daily chart), and long-term—above the key support levels of 101.40 (144 EMA on the weekly chart), 100.15 (200 EMA on the weekly chart), 100.00.
In this situation, despite the corrective decline, long positions remain preferable for now.
A signal for new long positions can be a breakout of today’s high at 106.64 and the local resistance level, marking the upper boundary of the recently formed range between the levels of 106.75 and 105.50. The nearest growth targets will be the local resistance levels of 107.32, 107.80, and 108.00.
In an alternative scenario, a break below the key support level of 104.00 will return the DXY to the medium-term bear market zone. The first signal to start implementing this scenario and opening short positions may be a break of the important short-term support level at 106.29 (200 EMA on the 1-hour chart) and yesterday’s low at 105.98, with confirmation coming from a break below the crucial short-term support level at 105.60 (200 EMA on the 4-hour chart), the lower boundary of the range, and the support level of 105.50.
A break below the key support level of 100.00 in the event of further DXY decline will create prerequisites for its entry into the long-term bear market zone.
Support levels: 106.29, 106.00, 105.60, 105.50, 105.15, 105.00, 104.00, 103.00, 102.00, 101.40, 101.00, 100.15, 100.00
Resistance levels: 106.75, 107.00, 107.32, 107.80, 108.00, 109.00, 109.25
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: