US DOLLAR FORECAST: USD TRADING LEVELS CHARTS FOR NEXT WEEK
- The DXY Index is on gait to tighten a week during a top turn given Oct final year with strong US mercantile information underscoring strength of a American economy
- USD cost opinion stays upbeat forward of Jan FOMC mins due for recover subsequent week
- FX sensitivity could arise into subsequent week if coronavirus fears light adult again and prompt another pierce safe-haven currencies, that has intensity to continue bolstering a US Dollar
The US Dollar has dominated a banking marketplace given a start of 2020 with a DXY Index – a benchmark measuring USD opening opposite a basket of other major banking pairs – charging 2.7% higher.
Greenback gains so distant this year can be essentially attributed to new strength of a US economy outperforming relations to baseline expectations, that has been exacerbated by an liquid of risk-aversion due to concerns over a novel coronavirus outbreak.
DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (JULY 2019 TO FEBRUARY 2020)
The DXY Index is on gait to tighten above a 99.00 hoop as forex traders continue to bid adult a US Dollar following a array of plain mercantile information releases like nonfarm payrolls reported final week in serve to acceleration total and consumer view data published this past Wednesday and Friday respectively.
After commanding a 76.8% Fibonacci retracement turn of a US Dollar Index’s many new bearish leg, there seems to be an open widen of runway for USD cost movement to continue a climb aloft to 2019 highs.
Although it is tenable that a US Dollar is overextended, a expanding Bollinger Band ™ could maybe promote serve upside intensity before a mean-reversion reduce or converging occurs.
USD MAY RISE IF FED BALANCE SHEET GROWTH DECELERATES
Another elemental growth that has softened USD cost opinion is a initial pointer of a Federal Reserve easing off a gas per a speed of change piece expansion.
Specifically, a New York Fed announced Thursday afternoon that it will diminution a total extent on overnight repurchase agreement operations (repos) from $120 Billion to $100 Billion and top for tenure repos from $35 Billion to $25 Billion.
US DOLLAR COULD EXTEND GAINS IF FOMC MINUTES UNDERSCORE NEUTRAL MONETARY POLICY OUTLOOK
Likewise, an additional pivotal motorist of a US Dollar’s instruction over a entrance trade days will expected be changes in FOMC seductiveness rate change probabilities.
Minutes from a January Fed meeting are slated for recover subsequent week according to a economic calendar, that could hint an assertive change in Fed rate cut bets and analogous pierce in USD cost action.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (1-WEEK)
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Options-implied trade ranges are distributed regulating 1-standard flaw (i.e. 68% statistical luck cost movement is contained within a pragmatic trade operation over a specified time frame).
That said, currency volatility for a week forward appears comparatively pale judging by a latest 1-week pragmatic sensitivity readings opposite several vital and teenager banking pairs.
If coronavirus fears take a behind seat, a USD and broader DXY Index could face downward vigour due to vanishing direct for safe-haven assets such as a US Dollar given a immeasurable liquidity.
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