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USDIDX retests 200 day SMA ahead of Fed speak

5:10 PM January 10, 2019

Summary:

  • USD rising after recent drop

  • Several Fed speakers this evening; Powell at 5:45 GMT

  • USDIDX retests 200 day SMA


There been some notable weakness in the buck of late with the US dollar falling back against many of its peers in recent trade. Today, however things are looking a little better for the greenback which is attempting to stage a recovery and trading higher against most of its peers. The appreciation is small at present and the rise could be described as tentative, given that the size remains pretty small despite it being seen against the majority of other currencies.

The US dollar is making small steps of recovery against most of its peers after falling lower in recent sessions. Source: xStation

 

The chief cause of the softness in the US dollar appears to have been the dovish shift seen in the Fed, with expectations for further rate hikes now far lower than they were towards the end of last year. This shift came about largely due to Powell’s speech last week and several Fed members, including chair Powell are due to speak this afternoon.

Speeches from Evans and Bullard come either side of Chairman Powell’s talk at the economic club of Washington this evening. These could have a significant impact on the US dollar. Source: xStation

 

The US dollar index can give the best overall impression of how the buck is doing on the whole, and we can see the market recently fell back to its 200 day SMA. This indicator has done a pretty good job of calling the trend in recent years with pushes above it signalling uptrends whereas a drop below it indicates the prevailing trend has turned lower. Along these lines, how the market trades around here could prove pivotal going forward with a clean move below 94.60 opening up the chance of further declines towards the 88 region. Alternatively if buyers can defend this level then there’s a suggestion the uptrend seen for the last ¾ of 2018 is still in tact and a push back up around 97.50 could then be expected.

The USD index has pulled back to its 200 day SMA - an indicator which has done a pretty good job of calling the prevailing trend in recent years. Source: xStation

 

 

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