US DOLLAR OUTLOOK: USD PRICE ACTION EYES KEY CATALYSTS FOR VOLATILITYUSD worth motion whipsawed Monday as weak spot waned all thr
US DOLLAR OUTLOOK: USD PRICE ACTION EYES KEY CATALYSTS FOR VOLATILITY
- USD worth motion whipsawed Monday as weak spot waned all through the buying and selling session
- The DXY Index inked recent two-year lows on an intraday foundation regardless of technical help
- US Greenback volatility in focus amid Brexit, stimulus talks, covid, FOMC determination and PMI information
The US Greenback endured a turbulent buying and selling session Wednesday as early weak spot morphed into power. US Greenback bears made a push to start out the week as GBP/USD worth motion popped on the again of UK-EU negotiators opting to lengthen Brexit negotiations, which largely contributed to the preliminary 0.63% decline notched by the DXY Index. It’s possible this weighed negatively on the US Greenback extra broadly and helped gasoline a risk-on tone throughout markets. Additionally, the primary spherical of coronavirus vaccine doses formally being dished out might have fostered upbeat market sentiment and exacerbated downward strain on safe-haven currencies such because the US Greenback.
| Change in | Longs | Shorts | OI |
| Every day | 2% | 8% | 6% |
| Weekly | -11% | 6% | -1% |
DXY – US DOLLAR INDEX PRICE CHART: 4-HOUR TIME FRAME (30 NOV TO 14 DEC 2020)
Chart by @RichDvorakFX created utilizing TradingView
That stated, market optimism turned much less sanguine as short-term dangers that stem from mounting coronavirus lockdown measures doused broader vaccine hope with chilly water. London introduced its strictest tier three lockdown protocol and likewise communicated details about a brand new variant of the virus ‘rising at a quicker tempo.’ Germany revealed nonessential companies are to shut as of Wednesday with the Netherlands set to enter a full nationwide lockdown as properly. New York Mayor Invoice de Blasio conveyed a necessity to arrange for the potential of one other full shutdown.
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These developments fueled the deterioration in market sentiment and helped drive the bid beneath USD worth motion as buying and selling progressed all through the session. On that notice, the US Greenback Index printed a bullish engulfing candlestick on a 4-hour chart after one other take a look at of technical help across the 90.55-price degree. Additional, the MACD indicator suggests bearish momentum has began to wane. A topside break above technical resistance highlighted on the chart above might open up the door for bulls to focus on the month-to-month opening degree across the 92.00-mark. Conversely, breaching the highlighted technical help degree would possibly inspire US Greenback bears to make a heartier push beneath the 90.00-handle with 2018 lows on the radar.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (1-WEEK)
Be taught Extra – What’s Implied Volatility & Why Ought to Merchants Care?
Turning to the DailyFX Financial Calendar brings to gentle the abundance of potential catalysts for volatility on the docket this week. Most distinguished occasion threat from an financial information perspective will possible be month-to-month PMIs and retail gross sales on faucet for launch this Wednesday, 16 December at 13:30 GMT and 14:45 GMT respectively. Moreover, the scheduled Fed assembly and charge determination due Wednesday, 16 December at 19:00 GMT shall be accompanied by quarterly financial projections. If the Federal Reserve disappoints the doves and diverges from offering more and more accommodative insurance policies like different central banks have, it might assist the US Greenback agency from present ranges.
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Ongoing stimulus negotiations is one other attainable driver of US Greenback volatility this week. Most just lately, bipartisan efforts have reportedly proposed a $908-billion reduction package deal that features a compromise on legal responsibility protections, which has been a serious sticking level leaving politicians at odds. However, it does seem as if a fabric portion of US Greenback weak spot attributed to an anticipated fiscal stimulus deal has been priced in already.
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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