US DOLLAR OUTLOOK: FED MEETING ON DECK BRINGS EUR/USD PRICE ACTION INTO FOCUSUS Greenback strengthened modestly on Monday regardl
US DOLLAR OUTLOOK: FED MEETING ON DECK BRINGS EUR/USD PRICE ACTION INTO FOCUS
- US Greenback strengthened modestly on Monday regardless of a notable decline in Treasury yields
- EUR/USD value motion edged decrease as safe-haven demand exacerbated Italian political danger
- Fed Chair Powell may undermine the US Greenback rebound try by echoing dovish coverage
- Study extra in regards to the fundamentals of technical evaluation or implied volatility buying and selling methods
The broader US Greenback superior barely throughout Monday’s buying and selling session. US Greenback power was led by EUR/USD value motion, which declined by about 30-pips. This largely fueled the modest 0.13% acquire notched by the DXY Index with the opposite main foreign money pairs virtually flat on the day. Curiously, the US Greenback traded on its entrance foot regardless of a notable 7-basis level drop in 10-year Treasury yields.
EUR/USD is likely to be going through headwinds from political uncertainty in Italy as Prime Minister Giuseppe Conte seems to resign. By extension, this will increase the potential danger of a snap election if a brand new coalition can’t be fashioned. Proof of demand for safe-haven currencies just like the US Greenback may have contributed to EUR/USD promoting strain additionally.
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DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (16 SEP 2020 TO 25 JAN 2021)
Chart by @RichDvorakFX created utilizing TradingView
The bid beneath the US Greenback appears to have corresponded with bulls defending the 20-day easy shifting common on the broader DXY Index. This potential technical assist degree underpinning the 90.00-handle may assist preserve the US Greenback afloat and rebound potential in focus. That mentioned, a breakdown beneath this barrier would possibly encourage US Greenback bears to wrestle again management and set their sights on year-to-date lows. However, the 91.10-price degree, roughly highlighted by the 38.2% Fibonacci retracement on the chart above, could function a attainable space of resistance earlier than the 100-day easy shifting common comes into consideration.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
Waiting for Tuesday’s buying and selling session, we see a reasonably mild financial calendar by way of potential catalysts for US Greenback volatility. Though, the IMF World Financial Outlook and shopper confidence information may affect market sentiment and transfer the needle. Additional down the horizon, an arguably bigger driver of US Greenback volatility would be the two-day Federal Reserve assembly set to kick off tomorrow.
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The FOMC assertion is slated for launch Wednesday, 27 January at 19:00 GMT and a press convention hosted by Fed Chair Powell will comply with. Focus will seemingly hinge on whether or not the Fed echoes its dedication to holding financial coverage uber-accomodative. If the Fed takes the chance to convey a barely hawkish tilt in its ahead steerage, nonetheless, the US Greenback may agency significantly.
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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