U.S Dollar demand is so high as a result of the corona virus pandemic that now there's a squeeze in the credit market. The dollar soared this week as investors liquidated positions across a broad range of assets, including stocks, gold, and bonds, to meet margin calls and raise cash. . Big corporations around the world start to draw down billions from their credit lines. Foreign firms who borrowed in dollars scramble to secure the currency amid fears dollar revenues will dry up.
To ease the squeeze in dollar's borrowing, the Fed introduced a series of steps. It lowers the rate on existing dollar swap lines with major central banks and increase the frequency of swap operations. The actions by the Fed helped to ease the funding crunch, but it's too early to say the dollar crunch is over.
In the asset management world, the dollar is still the primary currency. The South Korean Won for example sank to a 10-year low even though Seoul has done a lot of right things. It has accumulated foreign currency reserves and reduce reliance on short-term external debt. It has also managed the pandemic much better than the West. With the uncertainty of the economic outlook, disruptions in U.S. funding markets can persist, and US Dollar can continue to strengthen.
DXY (Dollar Index) Daily Elliott Wave Chart
US Dollar Index Elliott Wave chart above suggests that cycle from February 2018 remains incomplete. The rally is unfolding as a zigzag structure where wave a ended at 99.67 and wave b ended at 94.65. Potential minimum target for the move is 100% – 123.6% extension from February 2018 low which comes at 106.2 – 108.95. Near term, while pullback stays above 94.76, expect the Index to extend higher.
FURTHER DISCLOSURES AND DISCLAIMER CONCERNING RISK, RESPONSIBILITY AND LIABILITY Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of xperience and risk appetite. Do not invest or trade capital you cannot afford to lose. EME PROCESSING AND CONSULTING, LLC, THEIR REPRESENTATIVES, AND ANYONE WORKING FOR OR WITHIN WWW.ELLIOTTWAVE- FORECAST.COM is not responsible for any loss from any form of distributed advice, signal, analysis, or content. Again, we fully DISCLOSE to the Subscriber base that the Service as a whole, the individual Parties, Representatives, or owners shall not be liable to any and all Subscribers for any losses or damages as a result of any action taken by the Subscriber from any trade idea or signal posted on the website(s) distributed through any form of social-media, email, the website, and/or any other electronic, written, verbal, or future form of communication . All analysis, trading signals, trading recommendations, all charts, communicated interpretations of the wave counts, and all content from any media form produced by www.Elliottwave-forecast.com and/or the Representatives are solely the opinions and best efforts of the respective author(s). In general Forex instruments are highly leveraged, and traders can lose some or all of their initial margin funds. All content provided by www.Elliottwave-forecast.com is expressed in good faith and is intended to help Subscribers succeed in the marketplace, but it is never guaranteed. There is no “holy grail” to trading or forecasting the market and we are wrong sometimes like everyone else. Please understand and accept the risk involved when making any trading and/or investment decision. UNDERSTAND that all the content we provide is protected through copyright of EME PROCESSING AND CONSULTING, LLC. It is illegal to disseminate in any form of communication any part or all of our proprietary information without specific authorization. UNDERSTAND that you also agree to not allow persons that are not PAID SUBSCRIBERS to view any of the content not released publicly. IF YOU ARE FOUND TO BE IN VIOLATION OF THESE RESTRICTIONS you or your firm (as the Subscriber) will be charged fully with no discount for one year subscription to our Premium Plus Plan at $1,799.88 for EACH person or firm who received any of our content illegally through the respected intermediary’s (Subscriber in violation of terms) channel(s) of communication.