CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Another look at the US Dollar

October 21, 2019 2:15 PM

Another look at the US Dollar

With no economic data out from the US today, the markets remain quiet as we await news regarding whether a  Meaningful Vote on Brexit out of the UK could still take place tomorrow.  However, we have the ever-looming US-China trade negotiations where headlines rule, as well as the possibility that the USMCA deal make be voted on as soon as this week.  In addition, later today the market will know the results of the elections in Canada.  Any and all of these can move the US Dollar significantly, so let’s look at where the US Dollar Index and where it could go.

On a weekly timeframe, the DXY has been in a rising wedge since the beginning of 2018.  Last week, price finally broke lower out of the wedge and closed at the weeks low near 97.14.  A retest of the upward sloping trendline of the rising wedge is near 97.60.  The target for the breakdown from the wedge is a 100% retracement of the wedge, which is 88.42, however remember that we are looking at a weekly time frame and that nothing moves in a straight line, so this probably won’t happen quickly.  The first target on the downside is the 38.2% Fibonacci retracement level of the week of Feb 12th, 2018 lows to the week of the September 30th highs at 95.36.

Source: Tradingview, City Index

On a daily timeframe, the index has been in an upward sloping channel since June 2018.  However, since May of this year,  price has been trading in a rising wedge up to the top of the channel, and broke lower out of the wedge on October 15th.  The US Dollar Index has not looked back and is currently trading near the 127.2% Fibonacci extension from the June 25th low to the September 30th high.  Also notice that although not oversold, the RSI is at the lowest point it has been since formation the channel.  As mentioned on the weekly timeframe, the target for the breakdown of a descending wedge is a 100% retracement of the wedge, which is this case is 95.85.

Source: Tradingview, City Index

On a 240-minute timeframe, DXY has halted at the support zone we have been highlighting from 97.03 to 97.18.  Price is consolidating just above these levels, as the RSI unwinds from oversold conditions. 

Source: Tradingview, City Index

First resistance is prior lows near 97.50 and the weekly trendline noted above at 97.60.  Next resistance level is the 38.2% retracement level from the October 1st highs to today’s lows and prior lows at 98.10/98.20.  Support at 95.87, which is prior lows and the target for the descending wedge on the daily.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024