US Dollar Index Overview

US Dollar has been under pressure lately as investors have been bidding up the treasury bonds bringing the yields lower. The Fed has iterated time and again that they are willing to continue supporting the US economy with ultra-low interest rates and by keeping up the asset purchases. The Fed is buying Treasuries and Agency mortgage-backed securities (at least $80 Bn/mth $40 Bn/mth respectively). By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

Technically USD index (.DXA) is in a downtrend defined by a relatively narrow price channel. It is, however, approaching a rising trendline. It remains to be seen what its role (if any) will be this Wednesday at the time of the FOMC press conference. Traders should prepare for increased volatility during the press conference. The nearest confluence zone is at 91.40 – 91.65 (the 50% Fibonacci retracement level, the 50-day SMA and a recent reactionary high).

Currency Performance Charts

Commodity currencies AUD and NZD have been strong performers in both time periods while the safe-haven currency CHF clearly hasn’t been in the vogue. AUD has appreciated as the iron ore prices have continued to move higher after taking a breather. CAD gaining ground lately is due to the BOC decreasing its bond-buying program by $1 billion (25%). Percentage values in the above charts are recorded at the time of writing this report and remain subject to change.

Macro Drivers for the USD

News & Facts

Sanofi to help Moderna to manufacture vaccine doses the US
41.46% of the US population has received at least one dose of the Covid-19 vaccine
Fed committed to low rates. Believes inflation to be transitory.
Biden’s capital gains tax plan for the wealthy: 43.3%

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The Next Main Risk Events

USD CB Consumer Confidence
CAD BOC Gov Macklem’s Speech
AUD Consumer Price Index (q/q)
CAD Retail Sales
EUR ECB President Lagarde’s Speech
OIL WTI Crude Inventories
USD FOMC Statement
USD FOMC Press Conference

For more information see the TIOmarkets economic calendar here.

Trade Safe!

Janne Muta
Chief Market Analyst

TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions.

The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with any legal requirements for financial analyzes and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval. FX and CFDs are leveraged products. They are not suitable for every investor, as they carry a high risk of losing your capital. Please ensure you fully understand the risks involved.

All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated.

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Janne Muta

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