US dollar recovers only slightly after Tuesday’s crash.
After Tuesday’s breakdown, the US Dollar (USD) traded in a tight range on Wednesday. With neither buyers nor sellers willing to budge. Traders will be looking for more indications and confirmation if the Fed is genuinely done raising. With bets on when the Fed would cut first increasing. Meanwhile, rates are falling and equities are rising, implying. That the rate differential story between the US dollar and other currencies is losing importance.
This year’s calendar agenda is jam-packed, with all eyes on US Federal Reserve speakers: no less than five members of the Board of Governors are scheduled to speak. Add a few lighter data items that could corroborate and convince traders. That the Fed is truly done raising interest rates. And more Greenback depreciation could be on the way. The clock on the US debt ceiling is ticking in the background, with no real solution in sight.
US Dollar Technical Analysis
The US Dollar is attempting to recover from Tuesday’s catastrophe. However, the rebound is taking longer than expected, with just tiny steps seen in the US Dollar Index (DXY). It appears that traders have been unwinding. Only a significant trigger in favor of the Greenback will help to bring the DXY back to 105 and higher.
The DXY bounced off the 100-day Simple Moving Average (SMA) near 104.20. Expect a bounce from there, with 105.29, the November 6 low, as the market level to try to close above this week. From there, the 55-day SMA at 105.71 is the next price mark on the upside that US Dollar bulls must regain before thinking about more US Dollar strength.
Traders were cautioned that if the US Dollar Index fell below the 55-day simple moving average, a large air pocket would form.
There was an opening that may cause the DXY to plummet significantly. This happened on Tuesday. For the time being, the 100-day SMA is attempting to hold at 103.62, while the 200-day SMA is a far stronger contender for support. If that level is breached significantly, a long-term sell-off might begin, with the DXY dropping between 101.00 and 100.00.
