Strong US Dollar Dominates Forex: For How Long?
According to ICE data, the price of the US Dollar Index futures contract has reached its highest level since May 2 of this year.
This strength is reflected in the exchange rates of major currencies against the US dollar:
The USD/JPY rate has reached a record high since 1986, which we reported yesterday. Today, 1 USD was worth more than 161 yen.
The NZD/USD rate has dropped to its lowest level since May 15.
The USD/CHF rate has risen to its highest level since June 3.
Regarding the euro, the strength of the US dollar has pushed the EUR/USD rate down to significant support.
Technical analysis of the daily EUR/USD chart shows:
The price is in a large narrowing triangle (shown by blue lines) with a median around 1.07800;
Uncertainty related to political events in the Eurozone has also contributed to the euro's weakness, and today the EUR/USD price is at the lower boundary of the triangle. Since early June, the EUR/USD price has fallen by approximately 2%, forming a descending channel shown in red.
The proximity to the lower boundary of the triangle presents traders with two basic scenarios to consider:
A rebound and return to the median;
A bearish breakout of the triangle (e.g., with a weak intraday bullish rebound).
Which scenario will be realised largely depends on today's publication (at 15:30 GMT+3) of the PCE index values. It is possible that signals of slowing inflation will be perceived as a sign of an imminent Fed rate cut. Consequently, this could weaken the strength of the USD.
Read analytical EUR/GBP price forecasts for 2024 and beyond.
Read more: https://fxopen.com/blog/en/oa-strong-us-dollar-dominates-forex-for-how-long/
Text source: Forex Trading Blog
