The US Dollar Index continues its downward trend for the fourth consecutive session, slipping to around 104.20 during the Asian trading hours on Monday. However, the improved Producer Price Index from the United States bolstered the US Dollar, yet closed the session with losses.
DEMAND CHART
Buyers outsmarted the Market by Remaining Silent for the Better part of Last week. This is after price hitting the LTF Demand zone, 104.930.
The Buyers seemingly might be convinced that the Dollar is on a Falling Trajectory. This Analysis will help us understand the Demand order zone and get an insight on where to allocate Demand orders.
📈The immediate Demand zone is at (Proximal line- 103.824 & Distal line - 103.769). Buyers should not place any Demand orders prior for Price to test this zone.
🔍This will be A good Trading zone once the Buyers are back in trend. 1170 Points trade up into the Ltf Demand zone 104.930. and higher into the HTF Demand zone (Proximal line- 106.166 & Distal line- 106.765)
💡Position Traders should target the HTF demand zone which is 3000 Points above the immediate Demand zone
SUPPLY CHART
Sellers enjoyed the Control of Price action from the release of US CPI. After The Buyers took profits off their orders, the Volume decreased on the next Trading day (Wednesday) which allowed the Suppliers to inject fresh Supply orders into the Market
🔻From the Daily Timeframe, this was observed clearly after price closed on the Supply zone 104.731, sellers injected Sell orders easily to push Price Lower
🗓A Re-test followed on Friday after Price Came back to the Supply zone and Sellers made more Entry. This Signals to Show that Sellers are more concerned to take hold of Price Action.
💰The next Supply zone is at (Proximal line- 104.04 & Distal line- 104.006) Once they take price into this Supply zone, we'll expect Volume to reduce and give chance to Buyers to place their Bid
🔻From the Daily Timeframe, this was observed clearly after price closed on the Supply zone 104.731, sellers injected Sell orders easily to push Price Lower
🗓A Re-test followed on Friday after Price Came back to the Supply zone and Sellers made more Entry.
THE BIG PICTURE
USD BULLISH THEMES
Monetary policy dynamics should favor Dollar strength into the early part of next year
Softer growth outlook that will drive safe-haven flows towards the Dollar
Several factors support Dollar strength
Reasonably steady US economic trends and hawkish leaning Fed
Significant upgrades to for the next periods are set to keep US Dollar gains sustained
Markets featuring companies at the forefront of AI services could reinforce currency appreciation pressures
Slowdown in US inflation and growth is going to take a lot longer
When the dust settles, the Fed is set to continue raising rates
US to have permanently higher rates than elsewhere
Re-acceleration of inflation and its win over the Fed will continue to catch the market by surprise
The Dollar is higher for longer, alongside the Fed’s narrative
Stagflation to take USD even higher
Hot CPI means the Fed pivot is well beyond the horizon
USD BEARISH THEMES
Anticipated slowdown of the US economy
The hurdle for raising rates this month is higher, implying fresh US Dollar falls
Dollar weakness will pick up pace during 2024 as market attention turns toward Fed rate cuts
Fed feels more comfortable with receding inflation
US Dollar's position as the primary global reserve currency is being challenged
America on verge of losing petrodollar privilege
Other regions may need to continue their crusade for inflation, reducing spreads of debt securities yields
Combination of lower Fed rate expectations and improved risk sentiment is quintessentially negative
No more Fed hikes, potentially lethal to the US Dollar
US economy to slip into recession, Fed eventually cut rates quicker than peer institutions
Sticky inflation? What is sticky is the downtrend
Fed will start cutting interest rates quicker than foreign central banks
Backing the US disinflation process and lower US rates
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