USD PRICE OUTLOOK – US DOLLAR PRESSURED LOWER POST-FOMC DECISION TO EXTEND FX SWAP LINES; CHAIR POWELL REPLENISHES PROVERBIAL PUN
USD PRICE OUTLOOK – US DOLLAR PRESSURED LOWER POST-FOMC DECISION TO EXTEND FX SWAP LINES; CHAIR POWELL REPLENISHES PROVERBIAL PUNCH BOWL
- US Greenback perched close to intraday lows following the newest FOMC choice
- Fed officers agreed to increase US Greenback swap strains and repo operations
- USD value motion pressured with Federal Reserve lodging set to remain
A sharply weaker US Greenback has garnered fairly a little bit of consideration from market members over latest buying and selling classes. The DXY Index, a broad basket of high foreign money pairs, is pacing a large drop for July and the newest Fed assembly seems to emphasise US Greenback promoting strain.
Beneficial by Wealthy Dvorak
Foreign exchange for Newbies
This follows phrase from FOMC officers who agreed to increase US Greenback foreign money swaps with different main central banks till March 31, 2021. The Federal Reserve extending FX foundation swaps seems to proceed assuaging strains on US Greenback funding prices launched on the onset of the worldwide coronavirus pandemic.
DXY INDEX – US DOLLAR PRICE CHART: 5-MINUTE TIME FRAME (29 JULY 2020 INTRADAY)
Chart created by @RichDvorakFX with TradingView
The Dollar prolonged decrease instantly after the FOMC assertion crossed the wires and into the follow-up press convention from Fed Chair Powell. The top central banker echoed a necessity for a prolongment of accommodative financial coverage measures because of the appreciable danger that COVID-19 nonetheless poses to financial outlook over the medium-term.
Beneficial by Wealthy Dvorak
Introduction to Foreign exchange Information Buying and selling
As Fed Chair Powell was delivering his speech and answering questions, the US Greenback all of a sudden started to spike increased, however rapidly drifted again decrease. The transfer appeared predominantly pushed by short-lived revenue taking by Euro and Sterling bulls.
EUR/USD PRICE CHART: 1-HOUR TIME FRAME (23 JULY TO 29 JULY 2020)
EUR/USD value motion ripped increased and pierced the 1.1800-handle as US Greenback weak spot accelerated on the again of the FOMC choice. After flirting with this psychologically-significant barrier of technical resistance, spot EUR/USD surrendered a few of these good points, although the Euro held its short-term 8-hour shifting common and stays notably increased on the day.
GBP/USD PRICE CHART: 1-HOUR TIME FRAME (23 JULY TO 29 JULY 2020)
The cable staged an identical response with GBP/USD value motion ripping then dipping then recovering within the wake of the FOMC and Fed Chair Powell. After briefly eclipsing the 1.3000-price degree, the Pound-Greenback slipped about 50-pips from its intraday. The transfer decrease subsided as spot GBP/USD probed the 1.2950-mark with the main foreign money pair bouncing again in direction of session highs.
| Change in | Longs | Shorts | OI |
| Each day | 8% | 2% | 4% |
| Weekly | -4% | 15% | 7% |
Wanting ahead, there’s potential for the US Greenback to proceed its bearish pattern with the Fed dedicated to holding monetary situations unfastened because the financial system makes an attempt to recuperate from the sharpest decline anticipated in GDP progress on file. Maybe decrease Treasury yields, which possible follows sustained Fed asset purchases of Treasuries, along with decrease measures of anticipated market volatility recommended by the S&P 500 VIX ‘fear-gauge’, might underscore the current-standing bearish USD narrative.
Preserve Studying – King Greenback Dethroned as EUR/USD Surges, DXY Hits 2-12 months Low
— Written by Wealthy Dvorak, Analyst for DailyFX.com
Join with @RichDvorakFX on Twitter for real-time market perception