US Dollar Index outlook: Hits new 20-year high on signal that interest rates would remain high

Slobodan Drvenica Windsor Brokers

US Dollar Index

The dollar hit new 20-year high against the basket of major currencies in early Monday, driven by fresh demand on US interest rate outlook.

The dollar index opened with gap higher on Monday and rose to the highest since June 2002, after Fed Chair Jerome Powell, in his speech in Jackson Hole symposium on Friday, further boosted dollar’s positive sentiment by signals that US interest rates would stay higher as long as required to bring soaring inflation down.

Lift above former tops at 109.19/12 (also Fibo 76.4% of 2001/2008 downtrend) opens way for test of psychological 110 barrier, which guards 112.04 (June 2002 high), though the rally could accelerate towards 2001 peak if geopolitical and economic conditions deteriorate in coming months

Technical studies are bullish on all larger timeframes and contribute to positive outlook, with Friday’s long-tailed hammer candle signaling that the downside remains well protected, as last week’s pullback was very shallow and short-lived.

The index is on track for strong monthly advance (over 3%) which also marks the third consecutive month of rally and the biggest monthly gain since April that adds to positive signals.

Res: 109.42; 110.00; 110.22; 110.89.
Sup: 109.05; 108.67; 108.05; 107.46.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD sticks to positive bias above 1.1800 as trade jitters undermine USD

The EUR/USD pair builds on the previous day's modest gains and attracts some buyers for the second straight day on Thursday amid a softer US Dollar. Spot prices, however, lack bullish conviction and trade around the 1.1815-1.1820 area during the Asian session, up 0.10% for the day.

GBP/USD bounces as soft CPI boosts BoE cut bets

GBP/USD rose 0.42% on Wednesday, recovering toward 1.3600 in a session shaped by softer-than-expected UK inflation data and broad US Dollar weakness. The pair had been consolidating in a tight range between about 1.3450 and 1.3520 for the past few days following the sharp pullback from the late-January high near 1.3870, and Wednesday's move pushed price action back onto the high side of key moving averages.

Gold retains positive bias amid sustained safe-haven demand, softer USD

Gold attracts some buyers for the second straight day as trade jitters and geopolitical tensions ahead of the US-Iran nuclear talks underpin demand for safe-haven assets. Apart from this, a softer US Dollar further supports the bullion, though the underlying bullish sentiment could cap gains. Bulls might also opt to wait for acceptance above the $5,200 mark before positioning for any meaningful appreciating move.

UK financial watchdog advances stablecoin oversight as four firms pilot issuance

The Financial Conduct Authority in the United Kingdom is advancing toward the final stablecoin regulatory framework with a pilot program involving four companies, including Monee, Financial Technologies ReStabilise, Revolut and VVTX.

Nvidia delivers another monster earnings report, and forecasts big things to come

It was another monster earnings report from Nvidia for fiscal Q4. Revenues were $68.1bn, smashing estimates of $65bn. Gross profit margin was a healthy 75%, up from 73.5% in the prior quarter, and the outlook for this quarter was monstrous.

Cosmos Hub Price Forecast: ATOM rebounds slightly, bearish outlook remains intact

Cosmos Hub (ATOM) price rebounds, trading above $2.05 at the time of writing on Wednesday, after undergoing a sharp correction since last week. Weakening on-chain and derivatives data support a bearish outlook, while technical analysis remains unfavorable.