US Dollar Index outlook: Dollar remains supported by hawkish Fed and global growth fears
(Slobodan Drvenica – Windsor Brokers)
US Dollar Index
Bulls return to play on Monday after a brief consolidation on Thu/Fri and eye new 20-year high at 107.60, as dollar remains well supported by global growth concerns, weak Euro and strong signals that the Fed will remain on strong hawkish path.
Probe through Dec 2002 peak at 107.31 requires close above this level to confirm bullish signal and expose next target at 108.74 (Oct 2002 peak) and 109.67 (Sep 2002), which guards psychological 110 barrier.
Bullish daily studies support the action, but overbought conditions warn that bulls may face headwinds.
Rising 5 DMA offers immediate support at 106.82, followed by bull-trendline off 103.49 (June 28 trough) at 106.00, which should keep the downside protected and maintain strong bullish bias
Res: 107.60; 108.74; 109.67; 110.00.
Sup: 106.82; 106.27; 106.00; 105.75.
EUR/USD: We’ll see 1/1 this week?
(Vasilis Tsaprounis – TopFX)
Another interesting week is starting with E/$ exchange rate to be under pressure again. Maybe we will see the level of 1/1 this week.
Although the pair reacted as expected and neared the 1,02 level on Friday, it did not hold the gains as the US jobs report raised the odds for a further 75 basis points increase in September.
The satisfactory numbers lead to the conclusion that the US economy tends to avoid a recession for the time being, so the federal central bank can follow a more aggressive policy on raising interest rates to control inflation.
So the gap that is created between Fed and ECB policies shows no scope for closing at the moment, resulting in the US dollar being in an advantageous position.
We don’t expect any important economic element today, consequently, the market will move following technical charts.
Momentum remains strongly bearish and indicators that put the euro in an oversold position have seen some correction after Friday’s reaction.
We would prefer to keep neutral position although the chances the pair of breaking Thursday’s lows and moving closer to 1/1 are increased.
Probably the strategy for a short time buying positions is a good idea once again, waiting for a new reaction after the new dip.