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Dollar Bulls: Gas Left in the Tank?
According to the US Dollar Index, the USD finished last week with a modest gain (+0.1%) and recorded its seventh week in positive terrain. MTD, the Dollar index also concluded +1.7% in the green and snapped a two-month losing streak.
For those who follow my Weekly Market Insights on a regular basis, you will recall that I highlighted the clear long-term uptrend present on the monthly timeframe and the recent rebound from monthly support. I noted the following in previous writing (italics):
The long-term trend has been northbound since bottoming in 2008 at 70.70 if one focusses on the longer-term swings. Q4 (2022), as you can see, printed its latest correction from 114.78 (from channel resistance). Price action also recoiled from a substantial support level on the monthly timeframe at 99.67 in July (complemented by two neighbouring Fibonacci ratios [38.2% and 61.8%] at 98.72 and 98.95, respectively). This, of course, adds weight to the bullish offensive we have been seeing in recent weeks and is in harmony with the overall trend.
The monthly picture, therefore, remains dollar-positive in the long term.
On the daily timeframe, Thursday wrapped up in the shape of a bullish engulfing candle (these formations focus only on the candle’s real body and NOT the upper and lower shadows) and clipped a portion of the three-day decline earlier in the week. What’s interesting from a technical perspective is that Thursday’s rebound formed from the 200-day simple moving average at 103.06, with Friday's follow-through move (+0.6%) landing price on the doorstep of resistance at 104.42.
Any corrections within the pullback starting from 18 July (99.59 low) have been few and far between on the daily timeframe (note that we have been trending lower on the daily since Q4 2022 [the correction on the monthly scale]). This tells me there is some strength behind the recent USD offensive, at least in the medium term. The latest correction last week (from daily resistance at 104.42), however, will be a test for USD bulls. Should the index maintain its position above the 200-day SMA this week and eventually dethrone daily resistance at 104.42, this would likely prompt additional longs to enter the market, in line with the longer-term uptrend and recent bounce from monthly support (see above).
For those who follow my Weekly Market Insights on a regular basis, you will recall that I highlighted the clear long-term uptrend present on the monthly timeframe and the recent rebound from monthly support. I noted the following in previous writing (italics):
The long-term trend has been northbound since bottoming in 2008 at 70.70 if one focusses on the longer-term swings. Q4 (2022), as you can see, printed its latest correction from 114.78 (from channel resistance). Price action also recoiled from a substantial support level on the monthly timeframe at 99.67 in July (complemented by two neighbouring Fibonacci ratios [38.2% and 61.8%] at 98.72 and 98.95, respectively). This, of course, adds weight to the bullish offensive we have been seeing in recent weeks and is in harmony with the overall trend.
The monthly picture, therefore, remains dollar-positive in the long term.
On the daily timeframe, Thursday wrapped up in the shape of a bullish engulfing candle (these formations focus only on the candle’s real body and NOT the upper and lower shadows) and clipped a portion of the three-day decline earlier in the week. What’s interesting from a technical perspective is that Thursday’s rebound formed from the 200-day simple moving average at 103.06, with Friday's follow-through move (+0.6%) landing price on the doorstep of resistance at 104.42.
Any corrections within the pullback starting from 18 July (99.59 low) have been few and far between on the daily timeframe (note that we have been trending lower on the daily since Q4 2022 [the correction on the monthly scale]). This tells me there is some strength behind the recent USD offensive, at least in the medium term. The latest correction last week (from daily resistance at 104.42), however, will be a test for USD bulls. Should the index maintain its position above the 200-day SMA this week and eventually dethrone daily resistance at 104.42, this would likely prompt additional longs to enter the market, in line with the longer-term uptrend and recent bounce from monthly support (see above).
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