US DOLLAR OUTLOOK: USD PRICE ACTION SUPPORTED BY RISING VOLATILITY & FADING RISK APPETITE AS STOCKS START TO STUMBLEUS Greenb
US DOLLAR OUTLOOK: USD PRICE ACTION SUPPORTED BY RISING VOLATILITY & FADING RISK APPETITE AS STOCKS START TO STUMBLE
- US Greenback has gained about 1.5% on stability for the reason that newest backside notched by the DXY Index
- Inventory market volatility makes an attempt to pattern increased judging by the S&P 500 VIX Index
- The Dow Jones has dropped roughly 4.5% from its month-to-date prime as danger urge for food fades
The US Greenback continues to point out encouraging indicators {that a} potential bottoming try is likely to be in play. A modest 1.5% rebound set forth by the DXY Index since its month-to-date low has adopted the steep 4.5% drop recorded by the broader US Greenback between 25 Might and 10 June.
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US DOLLAR & VIX INDEX PRICE CHART: 4-HOUR TIME FRAME (04 MAY TO 17 JUN 2020)
Chart created by @RichDvorakFX with TradingView
USD value motion ricocheting increased appears to correspond with volatility on the rise once more. As indicated by the VIX Index, this common Wall Avenue ‘fear-gauge’ exhibits anticipated inventory market volatility has snapped again to multi-week highs amid deteriorating danger urge for food.
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On the identical time, with market sentiment starting to wane from its arguably euphoric state, the US Greenback, a well-liked safe-haven foreign money, has began to see a return of demand and shopping for stress. Cautious commentary from Fed Chair Powell on the US jobs market, along with rising coronavirus second wave danger, seem to have largely catalyzed the most recent shift in investor sentiment.
US DOLLAR & DOW JONES PRICE CHART: DAILY TIME FRAME (28 FEB TO 17 JUN 2020)
Chart created by @RichDvorakFX with TradingView
This theme can be mirrored by latest DJI value motion. After slipping greater than 4% from its 08 June shut, the Dow Jones Industrial Common is at present buying and selling barely above the 26,000 stage. The favored inventory market benchmark now fluctuates again between its medium-term (50-day) and long-term (200-day) easy shifting averages as shares begin to consolidate after staging an unimaginable rebound from the mid-March backside.
| Change in | Longs | Shorts | OI |
| Day by day | 7% | 2% | 4% |
| Weekly | 21% | -16% | -2% |
That mentioned, the course of implied volatility, such because the VIX Index, along with demand for different safe-haven belongings, just like the USD, may function robust bellwethers to the place the Dow Jones heads subsequent. Maybe one other increased low on the VIX Index, or equally, a better excessive on the broader US Greenback, would possibly foreshadow a bigger breakdown within the Dow, notably contemplating that shares face peril as a day of reckoning looms.
Hold Studying – US Greenback Rises from the Lifeless as VIX Soars, Shares Drop Sharply
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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