US DOLLAR PRICE OUTLOOK: DXY INDEX HITS 12-WEEK LOW AS INFLATION FEARS WANEUS Greenback bears drive the Dollar all the way down to its weakest deg
US DOLLAR PRICE OUTLOOK: DXY INDEX HITS 12-WEEK LOW AS INFLATION FEARS WANE
- US Greenback bears drive the Dollar all the way down to its weakest degree since late February
- DXY Index now trades within the purple year-to-date after falling -4% from its March peak
- Softer Treasury yields on account of much less concern of Fed tapering seemingly fueling USD weak spot
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The US Greenback is continuous its slide on Tuesday as bears steer the broader DXY Index to recent 12-week lows. US Greenback promoting strain has been felt throughout the board of main foreign money pairs on the session, although the Dollar has weakened notably towards the Euro with EUR/USD up about 60-pips intraday. Seeing that EUR/USD value motion is the biggest part of the DXY Index, this has largely helped strongarm the broader US Greenback decrease.
The newest extension of US Greenback weak spot leaves the DXY Index on tempo for its fourth-consecutive decline and buying and selling in detrimental territory year-to-date. This might observe Treasury yields pulling again barely with the ten-year shedding about 6-basis factors after failing to eclipse 1.7%. Maybe waning fears of inflation and Fed taper threat clarify these strikes as I beforehand famous how US Greenback outlook hinges on Treasury yield volatility (and lack thereof).
DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (24 DEC 2020 TO 18 MAY 2021)
Chart by @RichDvorakFX created utilizing TradingView
That stated, the broader US Greenback is wanting a bit prolonged right here because the relative power index flirts with ‘oversold’ territory. Additionally, there seems to be two obtrusive technical help ranges that US Greenback bulls would possibly look to defend. In the beginning is the 89.70-price degree on the DXY Index, which is underpinned by the 25 February swing low. The underside Bollinger Band would possibly assist stem US Greenback promoting strain as nicely. Invalidating technical help supplied by the 89.70-price degree, nevertheless, would seemingly open the door for US Greenback bears to focus on the 06 January swing low.
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Then again, DXY Index rebound efforts might convey a take a look at of the negatively-sloped 20-day easy shifting common into focus. Surmounting bearish trendline resistance would possibly coincide with follow-through greater towards the 50-day shifting common. However, with the intention to assist gauge the place the DXY Index heads subsequent, I might proceed to maintain shut tabs on Treasury yields and their usually robust direct relationship with the broader US Greenback.
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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