US DOLLAR PRICE OUTLOOK: EUR/USD, USD/JPY AWAIT PMI SURVEYS DUE
US Greenback bears drove the broader DXY Index -0.5% decrease on Thursday. This adopted a drop in Treasury yields that fully unwound yesterday’s rise sparked by FOMC minutes, which hinted at the menace of Fed tapering. Bstreet US Greenback weak spot despatched EUR/USD ripping 50-pips increased to check yearly open resistance whereas USD/JPY tumbled -0.41% on the session. The DXY Index now hovers again at a key space of technical help close to the 89.65-price stage.
DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (24 DEC 2020 TO 20 MAY 2021)
Chart by @RichDvorakFX created utilizing TradingView
US Greenback bulls would possibly look to defend this potential space of buoyancy underpinned by February’s month-to-month low. The underside Bollinger Band might additionally assist stymie US Greenback promoting strain. To that finish, the DXY Index arguably is beginning to look oversold right here judging by the relative power index. US Greenback rebound potential brings the 20-day easy shifting common and descending trendline into focus.
Eclipsing final week’s excessive round 90.80 would possibly open up the door to check the 50-day easy shifting common and higher Bollinger Band. Alternatively, one other spherical of US Greenback weak spot would possibly steer the DXY Index towards the 89.20-price stage the place year-to-date lows reside. Taking out that stage of technical help may even see US Greenback bears set their sights on 2018 swing lows deep into the 88.00-handle. This might affirm the ominous descending triangle chart sample that seems to be forming on the DXY Index.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
Waiting for Friday’s buying and selling session on the DailyFX Financial Calendar, we see notable occasion danger posed by the scheduled launch of PMI surveys by IHS Markit. Although in a single day US Greenback implied volatility readings counsel that main foreign money pairs are anticipated to have comparatively little motion. EUR/USD in a single day implied volatility of 5.5%, for instance, ranks within the backside 25th percentile of measurements taken over the past 12-months.
Likewise, USD/JPY in a single day implied volatility of 4.5% is beneath its 20-day common studying of 5.5% and ranks within the backside 20th percentile of readings over the past 12 months. If US PMI information emphasizes persistent provide chain disruptions and corresponding worth pressures, nevertheless, foreign money volatility might speed up alongside a pointy spike increased in Treasury yields as markets develop extra afraid of inflation and the chance of Fed tapering.
Maintain Studying – US Greenback Outlook: USD/JPY Hinges on Treasury Yield Volatility
— Written by Wealthy Dvorak, Analyst for DailyFX.com
Join with @RichDvorakFX on Twitter for real-time market perception
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