The US dollar index (DXY) is bobbing around just below the SMA 200 to open FOMC week
As always, there are a lot more analytical signals in play than just a nominal daily chart. But where the chart is concerned it shows the US dollar index having dropped below the uptrending SMA 200, bounced to test the breakdown and thus far holding below it. It shows the 50% Fib retrace laying in wait around 102, which is also support defined by the 2020 highs (not visible on this chart). There is also a shorter-term support shelf coinciding with the 62% Fib at 99.
This as Fed Funds futures show a deceleration in Fed hawk policy and eventual easing later in 2023. I would imagine that everyone can see the bearish fundamental implications for the US dollar. The technicals are breaking that way and the narrative should soon follow. Again, not going by a chart, but when considering a range of factors like an important one illustrated in an NFTRH+ subscriber update (password protected).
I don’t think we should go cookie cutter in our analysis of USD. The fact that a bullish US dollar accompanied the most intense phases of the now waning inflation trades is probably meaningful going into 2023, and correlations and outcomes may not be as normally expected.
But anyway, at face value the US dollar index is under threat of losing its major daily uptrend marker (SMA 200) with lower potential in the coming months.
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