USD PRICE OUTLOOK: US DOLLAR GAINS GROUND FOLLOWING MARKIT PMI DATAUS Greenback pushing greater in opposition to main FX friends
USD PRICE OUTLOOK: US DOLLAR GAINS GROUND FOLLOWING MARKIT PMI DATA
- US Greenback pushing greater in opposition to main FX friends on the again of world PMI knowledge
- USD value motion strengthening sharply off two-year lows factors to danger aversion
- EUR/USD might prolong its bearish correction as rising volatility boosts the US Greenback
The Buck is gaining floor throughout early Wednesday commerce because the US Greenback builds upon its bullish reversal try off two-year lows. USD value motion is strengthening within the wake of world PMI knowledge simply launched by IHS Markit, which revealed that enterprise exercise throughout a number of superior economies is slumping. Danger aversion in response to the disappointing PMI figures appears to be bidding up the US Greenback as a result of its posturing as a prime safe-haven forex.
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IHS MARKIT COMPOSITE PMI DATA – UNITED STATES VS EUROZONE
In line with the DailyFX Financial Calendar, flash US PMI knowledge was little modified month-over-month. The US manufacturing sector improved marginally from 53.1 to 53.5, however the extra essential providers sector element dropped from 55.zero to 54.6 for September.
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On a relative foundation, US financial exercise held up higher than its EU counterpart with Eurozone PMI knowledge displaying a sharper decline in its composite index to 50.1 from 51.9 reported beforehand. This divergence between EU and US PMI knowledge, which was first recognized proper after final month’s PMI knowledge launch, stands to gasoline broader US Greenback power.
US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (20 MAY TO 23 SEP 2020)
Chart created by @RichDvorakFX with TradingView
The US Greenback Index leaping above the 94.00-price degree seemingly serves as an unnerving technical growth for USD bears. This might validate a neckline break of the inverse head and shoulder reversal sample, which follows the US Greenback reclaiming its 50-day shifting common.
From a elementary perspective, rising market volatility stands out as a main driver steering USD value motion greater. Mounting danger aversion might exacerbate the resurgence of US Greenback power – notably if a brief squeeze ensues with Euro bulls unwinding their lengthy EUR/USD positions.
| Change in | Longs | Shorts | OI |
| Every day | 1% | 10% | 6% |
| Weekly | 10% | 3% | 6% |
EUR/USD PRICE CHART: DAILY TIME FRAME (12 JUN TO 23 SEP 2020)
That stated, the broader US Greenback reveals potential to proceed climbing with spot EUR/USD value motion breaching its crucial help zone across the 1.1700-mark. EUR/USD printing decrease lows brings to focus its 100-day shifting common close to the 1.1600-handle as a doable draw back goal for US Greenback bulls. This space of technical confluence can be underpinned by its mid-point retracement of the rally from 1.1200 to 1.2000.
Preserve Studying – USD Value Outlook: US Greenback Ripping Larger as Markets Swoon
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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