USD PRICE OUTLOOK: US DOLLAR SELLOFF SUBSIDES AS STIMULUS OPTIMISM SPUTTERS AHEAD OF GLOBAL PMI DATA DUEUS Greenback volatility s
USD PRICE OUTLOOK: US DOLLAR SELLOFF SUBSIDES AS STIMULUS OPTIMISM SPUTTERS AHEAD OF GLOBAL PMI DATA DUE
- US Greenback volatility stays heightened within the midst of back-and-forth stimulus negotiations
- DXY Index selloff stabilizes as doubts surrounding one other coronavirus support bundle resurface
- EUR/USD worth motion seems weak to doubtlessly disappointing international PMI information on deck
The broader US Greenback seems like it’s trying to stabilize and switch greater on Thursday following a pointy slide over the previous few buying and selling classes. Breaching the 50-day easy transferring common and neckline of the head and shoulder sample despatched the DXY Index spiraling decrease to the 92.50-price stage. In an effort to stymie latest draw back, US Greenback bulls appear to be staging a reduction bounce off the decrease Bollinger Band.
DXY INDEX – US DOLLAR PRICE CHART: DAILY TIME FRAME (15 JUL TO 22 OCT 2020)
Chart by @RichDvorakFX created utilizing TradingView
The US Greenback is probably going making an attempt to edge greater on the again of simmering optimism for an additional coronavirus support bundle earlier than the November 2020 election. Higher-than-expected US financial information launched this morning, reminiscent of jobless claims and present house gross sales, might be downplaying the sense of urgency to ship a stimulus deal as politicians stay at odds over how a lot fiscal support to offer and the way precisely to spend it. Nonetheless, the present state of fiscal stimulus negotiations stands to proceed strong-arming the path of USD worth motion and the broader US Greenback.
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Headlines pointing to additional progress towards reaching a stimulus deal would possible recharge the US Greenback selloff whereas a breakdown in negotiations has potential to ship the Buck snapping greater. That mentioned, the upcoming launch of worldwide PMI information has potential to exacerbate latest US Greenback volatility. Mounting new virus instances and restrictions on enterprise exercise throughout Europe and the UK might present up within the month-to-month PMI reviews on faucet for launch this Friday, 23 October.
| Change in | Longs | Shorts | OI |
| Day by day | 1% | 2% | 2% |
| Weekly | -26% | 39% | 12% |
The main financial reviews thus have potential to echo adjustments in progress trajectories for the US and different superior economies, which might exacerbate US Greenback volatility in flip. Disappointing PMI information would possibly encourage danger aversion and facilitate demand for high safe-haven currencies just like the US Greenback. Conversely, PMI information that crosses market wires roughly in step with expectations might inspire the resumption of broader US Greenback weak point with FX merchants nonetheless anticipating one other complete stimulus deal.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
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