Is the DXY on its last legs?
Fundamentals
The Dollar index has seen strong performance over the last year, however, last weeks performance could indicate a breakdown in dollar strength. Much will rest on this week's US Jobs report, with the hawkish Fed hike already priced into the dollar strength.
Last week the EU posted relatively strong numbers including growing inflation, however consumer confidence missed the estimate. The DXY is largely influenced by the performance of the EUR, more loosely followed by JPY and GBP due to index weightings.
Technical Analysis
The index broke through a key support level last week of 94.20 and then easily broke the 94 level, before quickly retracing.
Expect short term dollar strength as the retracement continues to the 94.50 level. and then a continuation of an impulse wave downwards.
The corrective zigzag wave is almost textbook to indicate the end of a trend, with lower highs and lower lows coming to the fore.
Post this weeks retracement, we could see the DXY target a new support level at 93.20.
This points to a short dollar trade, long EUR. A long XAU or XAG could also play out positively.
The Dollar index has seen strong performance over the last year, however, last weeks performance could indicate a breakdown in dollar strength. Much will rest on this week's US Jobs report, with the hawkish Fed hike already priced into the dollar strength.
Last week the EU posted relatively strong numbers including growing inflation, however consumer confidence missed the estimate. The DXY is largely influenced by the performance of the EUR, more loosely followed by JPY and GBP due to index weightings.
Technical Analysis
The index broke through a key support level last week of 94.20 and then easily broke the 94 level, before quickly retracing.
Expect short term dollar strength as the retracement continues to the 94.50 level. and then a continuation of an impulse wave downwards.
The corrective zigzag wave is almost textbook to indicate the end of a trend, with lower highs and lower lows coming to the fore.
Post this weeks retracement, we could see the DXY target a new support level at 93.20.
This points to a short dollar trade, long EUR. A long XAU or XAG could also play out positively.
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