US DOLLAR OUTLOOK: USD PRICE ACTION RESUMES SHARP SELLOFF AS FED ECHOES DOVISH POLICYUS Greenback swooned all through Thursday’s
US DOLLAR OUTLOOK: USD PRICE ACTION RESUMES SHARP SELLOFF AS FED ECHOES DOVISH POLICY
- US Greenback swooned all through Thursday’s buying and selling session as sellers flexed their muscle tissues
- USD worth motion below stress with the Federal Reserve underscoring its dovish stance
- The DXY Index prolonged its sharp slide to 32-month lows amid broad US Greenback weak spot
The US Greenback continued its precipitous decline on Thursday. USD worth motion weakened throughout all main foreign money pairs and drove the broad-based US Greenback Index 0.75% decrease for the session. It seems that US Greenback promoting stress has been recharged by Fed bond shopping for plans detailed yesterday. Prevailing threat tendencies fueled by Brexit deal hypothesis, vaccine optimism and financial stimulus negotiations doubtless contributed to US Greenback draw back as properly.
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DXY INDEX – US DOLLAR PRICE CHART: WEEKLY TIME FRAME (SEP 2019 TO DEC 2020)
Chart by @RichDvorakFX created utilizing TradingView
The DXY Index now trades beneath the psychologically-significant 90.00-price degree and appears primed to increase its decline towards 2018 lows. Although the US Greenback is beginning to appear oversold, a Bollinger Band growth might facilitate additional weak spot as bearish momentum accelerates and propels the Dollar decrease. In any case, it’s prudent for merchants to understand that the development is your good friend most of the time.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
Study Extra – What’s Implied Volatility & Why Ought to Merchants Care?
US Greenback implied volatility readings have cooled with occasion threat scheduled for this week now within the rearview mirror. With Brexit commerce talks nonetheless ongoing, nevertheless, spot GBP/USD worth motion might ‘paved the way’ as to the place the broader US Greenback heads subsequent. That is contemplating how GBP/USD efficiency is the third largest part of the US Greenback Index. Additionally, as one would possibly count on given the uncertainty surrounding potential for a no-deal Brexit, the cable remains to be anticipated to be essentially the most energetic main US Greenback foreign money pair headed into Friday’s buying and selling session with an in a single day implied volatility studying of 11.8%.
| Change in | Longs | Shorts | OI |
| Every day | 9% | 1% | 3% |
| Weekly | -16% | 34% | 11% |
That mentioned, Brexit commentary crossing the wires late Thursday conveyed a bitter tone with European Council President Ursula von der Leyen stating how “large variations stay to be bridged, particularly on fisheries.” UK Prime Minister Boris Johnson mentioned how Brexit commerce talks with the EU are in a ‘severe scenario with time working quick,’ including the way it now appears to be like ‘very doubtless’ that an settlement wouldn’t be reached except the EU place ‘modified considerably.’
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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