Monday trading hadn’t had much effect on the FX markets. The Dollar continued its downward trend since the Friday close until the Index rebounded off the psychological resistance level at $110.
We have seen a retracement in all major FX pairs and Gold as the Index rose from $110 to $110.4 in early morning trading hours. There are no major economic data releases this week until Thursday when CPI data will be published.
CPI data is forecasted to come out at 8%, down from 8.2% in October. If the data comes out stronger than expected, we would see a sell-off in the Dollar. Traders will take any strong inflation data as a signal that the Fed could pivot from tightening.
If CPI data comes out weaker than expected then we could see a bullish move in the USD. Traders will take weak inflation data as a signal that the Fed will keep rates high for longer.
In today’s DIFX Analytics, we’re going to look into the following assets:
Dollar may experience more decline
The DXY continued its bearish trend until it hit the psychological resistance at $110 which it then rebounded. The Index is now trading at $110.36 at the time of writing.
We can expect the asset to retrace followed by a continuation of its bearish trend until it hits the major support level around $109.5.
CPI data will be released on Thursday and is expected to come out at 8%. A strong reading will be bullish for the Dollar while a weak one could bring some downward pressure on the asset.
Bitcoin broke down below $20,000
Bitcoin broke the support level at $20,000 caused by FTT’s massive selloff from $22 – $15 which has sent shockwaves through the crypto market.
The last time we saw a project experiencing a similar threat, the leaders of that project had to sell large Bitcoin and Ether holdings to buy back their own tokens in order to keep the asset alive.
The RSI has broken the upward trend and is now indicating a short in Bitcoin, however, traders should keep an eye on the fundamentals of FTT and the ecosystem as a whole for any major move in Bitcoin
Gold is consolidating
Gold has consolidated around the $1680 range for most of the last 24 hours. We saw a slight decline down to $1670 in the past few hours. This happened at the same time as the upwards retracement on the Dollar Index at $110.
The correlation between these 2 assets is as prevalent as ever during this high inflationary environment. If the Dollar continues to retrace upwards then we can expect Gold to continue its downward trend.
Euro rejects key level at $1
EUR/USD rejected $1.00 during early morning trading as price action continues within our trend.
We should see a rebound in the asset toward $0.995 as the Dollar retraces. Traders would be waiting for the CPI data on Thursday which will be a major factor in the direction of the asset
If CPI data comes out stronger than expected then we can expect a selloff to $0.975, otherwise, the asset could break into the $1.00 – $1.02 range.
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DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.
