US DOLLAR OUTLOOK: GBP/USD PRICE ACTION SLIDES, USD/CAD ADVANCES AS VOLATILITY POPS TO START 2021 Markets teed off the brand new
US DOLLAR OUTLOOK: GBP/USD PRICE ACTION SLIDES, USD/CAD ADVANCES AS VOLATILITY POPS TO START 2021
Markets teed off the brand new 12 months with a continuation of the bearish US Greenback narrative on the APAC open. US Greenback promoting strain accelerated as soon as Europe got here on-line and propelled the DXY Index decrease by about -0.5% intraday, however the US Greenback clawed again misplaced floor as buying and selling progressed.
The mid-day bid beneath USD value motion appeared to correspond with a deterioration in market sentiment that seemingly stemmed from resurgent covid considerations. On steadiness, the US Greenback is ready to shut out the primary session of 2021 virtually unchanged gauging by DXY Index efficiency.
DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (08 OCT 2020 TO 04 JAN 2021)
Chart by @RichDvorakFX created utilizing TradingView
Looking throughout the main foreign money pairs, we see that US Greenback power was notable relative to its Pound Sterling and Canadian Greenback friends, although this was extensively offset by weak point in opposition to the Euro. GBP/USD value motion sank 150-pips from session highs as markets digested information that the UK is bracing for an additional nationwide lockdown set to take impact Tuesday, 05 January. USD/CAD pivoted 120-pips larger off intraday lows as bears didn’t maintain a push under the 1.2700-price stage. EUR/USD charges whipsawed equally.
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That each one stated, the broad restoration staged by USD value motion all through the session seems to have fashioned a bullish hammer candlestick on a day by day US Greenback Index chart. This brings to focus potential for an protracted reversal larger. An in depth above the 20-day easy shifting common may invalidate the standing bearish development and probably inspire US Greenback bulls to check technical resistance posed by the 91.05-price stage. Then again, US Greenback promoting strain might re-accelerate if the DXY Index breaches its 04 January intraday swing low.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
US Greenback implied volatility readings have turned larger since a lull over the vacations. Bigger-than-expected swings throughout USD value motion just lately may be inflating the figures. To not point out, the week forward showcases a number of catalysts for volatility lurking on the horizon with potential to weigh materially on the path of the US Greenback. This may warrant comparatively extra stringent danger administration strategies till the mud settles and readability emerges within the wake of high-impact occasion danger that looms.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
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