5/18/2021
USD pairs continue to push lower amid inflation fears as we see price hitting multi-month lows all around the board. The consumer price index or CPI has seen the biggest increase since September 2008 (housing crisis crash) of 4.2% as of a few days ago. The cost of most goods has risen tremendously due to the rise of inflation that has caught up with the Fed who had printed trillions of dollars after the March crash of 2020.
DXY
The dollar index (DXY) shows steady declines since April of this year. On the 4H chart, a strong downtrend looks very obvious, and heavy tops show hard resistance that this index will surely struggle with on the technical level. However, it does appear that DXY has bottomed for the time being; this index likes to create new lows before bouncing up and hitting resistance that eventually pushes price back lower again. The long wick on the mots recent 4H candle shows that price might be ready to swing up and set up another short play. With inflation now at 4.20%, there is hardly much of any reason to be bullish on the dollar so further lows are expected.
USD/CHF
UC looks pretty bearish too as price seems to have potentially bottomed out for the time being. If this is true, we could see another test at resistance on the falling trend line drawn on this chart. This pair is the biggest mover for the day at a -0.65% drop today even with bearish sentiment around the Swiss Franc and their negative interest rates. Below is an image of USDCHF paired with the DXY to show how the pair mimics DXY.
You can see that this pair is heavily mirroring the DXY which is something important to note. This could mean that USD is what traders should pay attention to in gauging where USDCHF could move in the near future.
XAU/USD
In the same sense, let's look at how gold moves when compared to DXY. You can tell that the dollar index moves are less volatile, but very much opposite of how gold moves. When gold tanked at the start of this year, the dollar gained. And now DXY is falling while the gold pair rises up above huge resistance. Overall sentiment is bearish on the dollar, so buying this pair means long gold and short USD.
GDP numbers came in lower than expected in the US, marking the third straight drop in economic output. This is usually good news for the stock market indices and gold, however, bond yields continue to hold up above 5.1%. Here are some potential trade setups for both dollar and index longs depending on how the […]
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Last Friday's report showed a significant change in global market sentiment from smart money. What COT signaled has turned ultra-risk-off for traders who have been hoping for Fed fears to subside. This news could spark up worries about higher interest rates for the long term. EdgeFinder Analysis GBPUSD is now a -12 on the EdgeFinder […]
