VOT Research Desk

Market Analytics and Technical Considerations

On Monday, the US Dollar gained again as a result of higher yields.

There have been more incidents of COVID-19 in China, and some areas of numerous cities are under lockdown.

After Friday’s gains, the US Dollar strengthened once more on Monday, with Treasury yields rising across the curve. The one-year note is getting close to the highest level in 21 years, which was 4.84 percent earlier this month.

Risk-off trading was widespread to begin the week due to rising Covid-19 cases in China.

Due to their perceived status as safe havens, the Swiss franc and Japanese yen have performed “least-worse” against the dollar thus far today.

The Commodity Futures Trading Commission (CFTC) Commitment of Traders (COT) report released late on Friday revealed that for the first time since July 2021, speculators had turned to net shorting US dollars.

Concerns about additional lockdowns after three Covid-19 deaths over the weekend in Beijing caused Chinese stocks to fall. There are more restrictions in major Chinese cities like Chongqing, Guangzhou, and Shijiazhuang.

Before recovering somewhat, the Hang Seng Index (HSI) of Hong Kong was down more than 3% at one point. The CSI 300 index on the mainland of China is also down, but to a lesser extent.

Despite a slight positive lead from the close on Wall Street on Friday, the indices for Australia and Japan are fairly flat.

Due to concerns about global growth and a stronger US dollar, crude oil is lower to begin the week. The Brent contract is less than US$ 87 bbl, while the WTI futures contract is less than US$ 80 bbl.

Gold is also under pressure, currently trading below US$ 1,750.

The US will receive the Chicago Fed National Activity Index data following the German PPI.A number of speakers from the Fed, ECB, Bundesbank, and Bank of England will cross the wire.

DXY (USD) INDEX TECHNICAL ASSESSMENT

The DXY index measures the value of the US dollar against the euro (57.6%), the yen (13.6%), the pound (11.9%), the Canadian dollar (9.1%), the Swedish krona (4.2%), and the yen (3.6%).

The US dollar has begun to rise after returning within the lower band of the 21-day simple moving average (SMA)-based Bollinger Band last week.

It is moving toward a possible breakpoint at 107.43. Above that, it may face additional resistance at 107.68, 109.30, 109.37, and 109.54.

The previous lows of 105.34, 104.64, 103.67, or 101.30 could serve as support.

Summary