DXY at Resistance as Markets Wait for Jackson Hole

in forex •  29 days ago 

forexbrokr-steemit-header.png

Direct from the desk of Dane Williams,
This is not your average forex broker blog.


Morning team,

What a frustrating week of price action it's been. While price action has chopped about on Brexit headlines, markets are really just in wait and see mode in anticipation of this weekend's Jackon Hole Symposium.

With EUR/USD just hovering on top of daily support, the intraday, headline driven price spikes really are doing nothing for the structural direction of markets.

Today's big ticket item on the economic calendar is the August FOMC minutes. A normally highly sensitive market moving release. But with Jackson Hole on the horizon and so much going on between Trump, China, Yields etc etc, you could make a case for this already being proper old news.

The Fed cut rates that meeting, but let's be honest. Their communication of future direction of monetary policy has been a hatchet job.

Each time a central banker steps up to speak at Jackson Hole, the market is going to have their trigger fingers ready. I feel that this weekend is a lot more important than recent years gone by, simply because we don't know how central banks are going to help their respective economies avoid recession.

Yes, that R-word.

Interest rate futures across the globe are pricing in further, multiple rate cuts. Central banks are going to cut whats left of their rates toward zero, in a desperate attempt to drive economic growth.

But how about this for an interesting question that arose in an interesting discussion that I had with another analyst. What if central banks slash rates to zero, but fear of a real US v China trade/currency war, means that the real economy doesn't actually invest.

Then what? Central banks have used up all of their bullets and the economy is left to rely on Trump's Twitter PR team to do the real economic heavy lifting?

God help us all.

How central bankers communicate their forward guidance at Jackson Hole is the key. Until then, it's probably not wise to expect much structurally significant movement in forex markets.

Best of probabilities to you,

Dane.


DXY Technical Analysis

With macroeconomics being the theme of the week, it might be a good idea to the share a high level chart like the DXY.

So what is the DXY, you might be asking? Well the US Dollar Index (otherwise known as DXY, USDX or whatever your MT4 broker calls their synthetic CFD), is a trade weighted index of the US Dollar. It measures the value of the US Dollar relative to a basket of currencies.

With traders in my Inner Circle likely to be long EUR/USD, it's important to note that this pair makes up over half of the DXY. This is why you'll notice that when EUR/USD is at support, the DXY will more than likely be at resistance.

We know the Euro is at daily support, so where's the DXY?

DXY Daily:
190821-dxy-d1.png

You know it. Right up against higher time frame resistance on the daily.

If price breaks this zone, then it's not all time highs and I don't think it will go parabolic like I'm hearing some analysts say. There is still plenty of resistance to find on the weekly chart if you take the time to zoom out.

But when you are pushing up toward resistance like this, it is most certainly significant. This is the sort of level that isn't going to just break on low liquidity. It's waiting for a major fundamental direction so markets can decide whether the level holds or goes.

It's all about Jackson Hole.

While my Steemit blog focuses on high level market analysis, my Inner Circle daily email focuses on how to actually make money trading around these levels.

Click here to join my Inner Circle.


Today's Economic Releases

USD FOMC Meeting Minutes
EUR French Flash Services PMI
EUR German Flash Manufacturing PMI
EUR German Flash Services PMI



forexbrokr-logo1.png

@forexbrokr | Steemit Blog

Market Analyst and Forex Broker.

Join my Inner Circle ⭕️ - www.forexbrokr.com

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

If the Fed does proceed to announce a rate cut on Friday, DXY will drop and the equity market may rally. Precious metals like physical gold and silver will most likely see higher prices.

From a trading perspective, DXY is at resistance and poised to drop. Dovish Fed speakers at Jackson Hole would likely see the scenario play out nicely.

Posted using Partiko iOS