- USD on the move and breaking critical monthly resistances.
- All eyes on the Fed and covid as well as the US economic growth divergence.
The US dollar has been moving higher of late, scoring through a critical level of resistance and so far doing so convincingly.
It was net unchanged against fellow haven Japanese yen, but otherwise strong against the G10, CAD and AUD weakest.
This depicts the market sentiment of late and the divergence between the global central banks.
This is something that is explained in more detail here:
US dollar teases reversal traders, Golden Cross underpins
The DXY has been tracked for a number of articles that forecasted a break of the critical support mear 93.50.
Prior analysis, projected path for DXY
''The above chart illustrates the series of fundamental events that have led to the recent Golden Cross on the daily time frame.''
As illustrated, the price had been building up for a correction and to then move back in the direction of the bullish and dominant trend.
Live market analysis
The price moved in the forecasted trajectory, if not a little prematurely considering the US dollar has made its move with the market second-guessing the outcome of the Jackson Hole.
The price is now taking on a critical resistance area on the longer-term charts:
This is a monthly chart that shows the break of monthly highs of 93.43.
Bulls will want to see the price hold above here for a weekly close in the 93.50s. In doing so, it will embolden dollar bulls for the foreseeable future in the countdown to the Fed's tapering.
USD smile theory firmly in play
The US dollar smile theory continues to play out to the point that it has broken technical structure and resistance confluences on the longer-term charts.
These were the 10 and 20 EMA bullish cross-over, as well as the 200, smoothed simple moving average.
This has confirmed the monthly double bottom as well as the cup and handle:
''US data are feeding into increased dollar bullishness and the Fed continues to take tentative steps towards tapering. On the other hand, risk-off and uncertainty pertaining to the global pandemic are also expected to support the US dollar recently.
Therefore, the greenback is likely to benefit in either situation. Hence, the ''dollar smile'' as the dollar turns up at both ends of the risk spectrum,'' analysts at Brown Brothers Harriman explained.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD steady near 1.0650 as markets gear up for PMI-heavy Tuesday
EUR/USD is testing the waters near 1.0650 after a quiet Monday saw the major pair flatline ahead of a densely-packed economic data docket. Both the US and the wider Eurozone area will see updates to Purchasing Managers Index (PMI) figures on Tuesday.
GBP/USD: Flat lines around mid-1.2300s, bearish potential seems intact
GBP/USD holds steady on Tuesday amid subdued USD demand, albeit lacks bullish conviction. The divergent Fed-BoE policy expectations turn out to be a key factor acting as a headwind. The technical setup suggests that the path of least resistance for the pair is to the downside.
Gold could see a rebound before resuming the correction
Gold price sees a fresh leg down in Asia on Tuesday even as risk flows dissipate. Receding fears over Middle East escalation offset subdued US Dollar and Treasury bond yields. Gold remains heavily oversold on the 4H chart, rebound appears in the offing.
PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange
Pendle price is among the top performers in the cryptocurrency market today, posting double-digit gains. Its peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by Bitcoin price.
After Monday's relief rally, attention shifts to earnings and policy fronts
With the easing of tensions in the Middle East, safe-haven demand reversed course; global stock markets experienced a modicum of relief. Indeed, in a classic relief rally fashion, Monday saw a rebound in the S&P 500, snapping a six-day losing streak.