Home Forex Weekly Technical US Dollar Forecast: Finally Turning Higher?

Weekly Technical US Dollar Forecast: Finally Turning Higher?

by kyngsam


Technical Forecast for the US Greenback: Impartial

  • The DXY Index has held onto key technical assist, suggesting that bulls might have a bit extra combat left but.
  • Web-short US Greenback futures positioning has eased because the DXY Index has rallied, however has not shifted that considerably from ranges seen going again to mid-December 2020.
  • The IG Client Sentiment Index suggests that the Euro, the biggest element of the DXY Index, has a bearish bias within the near-term.

US Greenback Charges Week in Overview

The US Greenback (by way of the DXY Index) was having lackluster week till Thursday (whilst Fed Chair Jerome Powell testified on Capitol Hill), when it appears the uptick in US Treasury yields lastly spilled over to FX markets, lifting the buck by means of Friday into the weekly shut. The DXY Index rallied by +0.57%, its second finest weekly efficiency year-to-date, simply behind the second week of January (+0.70%).

The US Greenback gauge warded off a big technical breakdown, and now it appears that major technical damage is ‘undone,’ to an extent. The arrival of the primary week of a brand new month ought to carry in regards to the ordinary uptick in volatility in USD-pairs, thanks partly to elevated occasion danger.

USD Forecast

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US Financial Calendar Week Forward

The first week of March provides a sturdy financial calendar, with a world focus throughout the early a part of the week and a US-centric focus to cap issues off. There are a number of objects on the calendar which can be price being attentive to from the US Greenback’s perspective, culminating within the March US labor market report on Friday.

– On Monday, the ultimate February US Markit Manufacturing PMI and the February US ISM Manufacturing PMI will probably be launched, as will the January US building spending figures.

– Fed Governor Lael Brainard will probably be giving speeches on Monday and Tuesday.

– On Wednesday, the February US ADP employment change report will probably be launched, as will the February US ISM Non-Manufacturing PMI. In a while Wednesday, the Fed Beige E-book is due.

– On Thursday, focus swings to US labor markets, with the weekly US jobless claims figures out, in addition to the January US manufacturing unit orders report. Fed Chair Powell will give a speech on Thursday, which is able to possible concentrate on latest motion in US Treasury yields.

– On Friday, the February US non-farm payrolls report in addition to the February US unemployment charge will probably be launched. Later within the day, the US finances plan for fiscal yr 2022 will probably be made public.

For full US financial information forecasts, view the DailyFX economic calendar.

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DXY PRICE INDEX TECHNICAL ANALYSIS: DAILY CHART (February 2020 to February 2021) (CHART 1)

Weekly Technical US Dollar Forecast: Finally Turning Higher?

The DXY Index had been clinging onto the downtrend from the March and November 2020 highs, however was lastly in a position to flip increased on Thursday and Friday, breaking the intramonth downtrend within the course of. Early-March will show to be a big psychological check for the US Greenback, the sequence of decrease highs and decrease lows was by no means damaged all through February. Now, a transfer over the mid-February swing excessive of 91.06 would recommend that the flip increased is gaining legitimacy.

Momentum is popping after the abrupt rally in costs. The DXY Index is above its day by day 5-, 8-, 13-, and 21-EMA envelope, which is in neither bearish nor bullish sequential order. Day by day Gradual Stochastics are driving increased from oversold territory, whereas day by day MACD is beginning to flip increased albeit under its sign line. Extra choppiness may very well be forward, which was roughly the state of affairs all through February.

DXY PRICE INDEX TECHNICAL ANALYSIS: WEEKLY CHART (February 2011 to February 2021) (CHART 2)

Weekly Technical US Dollar Forecast: Finally Turning Higher?

The longer-term view established within the latter half of December 2020 stays legitimate: “we thus view the most recent improvement with hesitation, notably when considered in context of the longer-term technical injury wrought in latest months; the DXY Index stays under its multi-year uptrend, and may very well be engaged on a multi-year double high. As long as the rebound stays under 91.75, the DXY Index outlook stays bearish on a longer-term foundation.”

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CFTC COT US Greenback Futures Positioning (February 2020 to February 2021) (Chart 3)

Weekly Technical US Dollar Forecast: Finally Turning Higher?

Subsequent, taking a look at positioning, in keeping with the CFTC’s COT for the week ended February 23, speculators barely decreased their net-short US Greenback positions to 13,851 contracts, down from 14,287 contracts held within the week prior. Web-short US Greenback positioning stays close to its highest ranges since March 2011, when speculators held 15,494 net-short contracts. Positioning is now the least net-short because the first week of December, when speculators held 6,486 contracts.

IG Shopper Sentiment Index: EUR/USD Fee Forecast (February 28, 2021) (Chart 4)

Weekly Technical US Dollar Forecast: Finally Turning Higher?

EUR/USD: Retail dealer information reveals 45.61% of merchants are net-long with the ratio of merchants quick to lengthy at 1.19 to 1. The variety of merchants net-long is 2.36% increased than yesterday and three.00% decrease from final week, whereas the variety of merchants net-short is 24.89% decrease than yesterday and 24.74% decrease from final week.

We usually take a contrarian view to crowd sentiment, and the actual fact merchants are net-short suggests EUR/USD costs might proceed to rise.

But merchants are much less net-short than yesterday and in contrast with final week. Latest adjustments in sentiment warn that the present EUR/USD value pattern might quickly reverse decrease regardless of the actual fact merchants stay net-short.

— Written by Christopher Vecchio, CFA, Senior Foreign money Strategist





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