USDJPY SHORT: FOMC ON TAP! We expect the FED to lower rates as expected. We could see the dollar become weaker against the Yen if we do not get any unexpected surprises today from the FED.
Shortdollar
Still Bearish on DXYDXY can see some correction to the upside and reach 102.5 or even climb up to 103.5 before September 18, 2024, which, most probably we'll see the first rate cut after a long time.
So be patient and wait for this week's NFP.
Check out my post on June 11 to see how DXY followed our yellow scenario. 😉
Short Dollar Index at Strong Resistance
The US dollar index, technical analysis compared against the seven other major FX currencies(AUD, CAD, JPY, CHF, GBP, EUR, and NZD), is at a strong resistance level, with RSI momentum levels close to being overbought.
Fundamentally and based on the analysis of various economic indicators, the US dollar appears to be leaning towards an inflationary bias, but some conflicting signals suggest potential deflationary pressures. Key points include:
Leading Indicators: PMI and Services PMI indicate a growing economy, potentially leading to inflation. However, momentum is slowing down, which could temper the inflationary outlook.
Money Indicators: M2 is historically low and bouncing higher, coupled with the decreasing interest rates (IRs) and real interest rates (Real IRs) velocity, indicating a possible shift towards looser monetary policy and an inflationary bias.
Inflation Measures: While CPI inflation is now close to average levels, the Core CPI is heading toward normality and decreasing, suggesting some downward pressure on inflation. PPI (Producers Inflation) has shown signs of bouncing higher, indicating potential inflationary tendencies.
Employment: Employment trends point to medium to low inflation expectations, as employment change is within YoY% average levels.
Considering these factors, the ultimate currency bias leans slightly towards an inflationary outlook for the US dollar. However, the mixed nature of the signals suggests a need for continued monitoring of economic indicators and policies to accurately assess the currency's direction.
DXY Setting up For News 01/12/2023
information shared is for educational and demo purposed only, trading is risky and you can loose 100% of your trading capital
Developing A Dollar Bearish Strategy Using The Scientific MethodShould I Short USD? Yes or No?
If yes, then how? If no, then why?
The question is simple, but the answer may be complicated.
Therefore, we will dive into the macroeconomics of the American economy, with consideration given the most significant factors influencing the value of USD.
> OBSERVATIONS
1) Since March 2020, USD appears to have lost approximately 13% of it's market value.
2) Since March 2020, USD supply increased by $9.1 Trillion (COVID stimulus).
datalab.usaspending.gov
3) Congress was recently asked to approve an additional $1.9 Trillion (COVID stimulus).
context-cdn.washingtonpost.com
> RESEARCH
Part A: Three major external factors contribute to the value of USD...
www.investopedia.com
1) Supply and demand:
Exporting American products and services creates demand for USD, because foreign investors must exchange their currency for USD, in order to complete the transaction.
Note: decreased exports = decreased demand = decreased USD value
Note: decreased stock/bond issuance = decreased demand = decreased USD value
2) Sentiment and market psychology:
Rising unemployment weakens the economy, reduces income, and slows consumption. If the US economy appears weak, foreign investors may sell-off their US securities, in favor of exchanging back to their national currency.
Note: decreased employment = decreased consumption = decreased USD value
Note: negative sentiment = decreased foreign investment = decreased USD value
3) Technicals:
The release of government statistics (payroll data, GDP data, etc.) may help quantify whether the economy is strong or weak. Historical patterns generated by cyclical support/resistance levels and technical indicators also contribute to the movement of USD.
Gross domestic product (GDP) is the total value of all the finished goods and services produced (in this case, within American borders)
www.investopedia.com
Note: decreased employment = decreased GDP = decreased USD value
Part B: Four major internal tools (utilized by the Fed) contribute to the value of USD...
www.federalreserve.gov
1) Discount rate:
The interest rate reserve banks charge commercial banks for short-term loans.
2) Reserve requirements:
The portions of deposits that banks must hold in cash in vaults or on deposit.
3) Open market operations:
The buying and selling of U.S. government securities (T-bills, bonds, and notes).
4) Interest on Reserves:
The interest paid on excess reserves held at reserve banks.
> HYPOTHESIS
Shorting USD will be profitable because the Fed is increasing money supply.
Shorting USD will be profitable because the Fed is maintaining interest rates near zero.
Shorting USD will be profitable because the Fed is maintaining reserve requirements at zero.
Shorting USD will be profitable because the Fed is repurchasing government bonds on the open market.
> EXPERIMENT
Part A: Build a diversified dollar bearish portfolio.
Include dollar bearish securities and commodities (FXC, FXE, UDN, GLD, IAU, DBC, DBP)
Include International stock and emerging markets ETFs (open to all suggestions for this)
Include foreign currencies (GBP, CAD, AUD, CNY, CHF, KRW, JPY, EUR)
Include crypto currencies (BTC, ETH, LTC, and especially the DeFi sector)
> RESULTS
Pending... follow me for a monthly update to see if I get rekt, much love!
BUY EURUSD Buy NZDUSD at 0.5669 Target 0.5816 stops below 0.5640 Use proper money management. As I said earlier the big boys are shorting the dollar.
It's time 2 strike on DollarOn the daily chart of the EUR/USD , the completion of a bullish divergence is observed today. Euro has reached a 50% correction to the downward impulse on January 14-28, 2022 and the resistance level is around 1.1313. These and other factors of our trading strategy give a signal for the growth of the Euro. We believe that the first wave of this growth has come to the end, as evidenced by the signals of a bearish (double) divergence on H1 chart.
It is too early to talk about the medium-term reversal of the pair's trend, however, already now we can assume the growth of the pair to the new local highs above 1.1500. Since the wave 1.11214-1.13298 is the first wave of the expected, at least a three-wave cycle, then the correction to it is assumed to be quite deep - at least 50%, and in the classical version of the wave cycle evolution - up to 61.8%. After the end of the correction, we expect growth to the levels of 1.1520-1.1540 (1.15382 - 200% Fibonacci extension from wave 1.11214-1.13298, 1.1520 – long-term level of support and resistance). To enter a trade at the end of the correction, it is necessary to monitor the situation at short timeframes (ideally, at M15).
Also, there is a version for a deeper correction - up to 100%, with an approach and even, possibly, with a short-term puncture of the low of 1.11214. In this case, we will see a classic double bottom or a figure close to it. So, the targets of 1.1480-1.1490 will become even more obvious.
How to trade.
Waiting for the end of the correction to the impulse 1.11214-1.13298. Reference point - Fibonacci correction levels and signals of indicators on the M15 charts. Open long in EUR/USD with targets 1.1520-1.1540, stop-loss - at the level of the correction minimum or at 1.1120.
A situation similar to the EUR/USD is emerging on the charts of the AUD/USD and NZD/USD.
USD SHORTToday is FOMC, which is important for the dollars direction.
I expect a drop from this event.
Along with my technical analysis and good RR, this setup is nice one.
Dead DollarKing dollar is about to pee his pants.
Impulsive move counted on the downside basically right after it was announced that congress printed 1.1 trillion for the infrastructure.
Currently it costs $1.20 to pay for $1 of goods and services.
This means that whatever money printing we do now is actually a negative.
We just finished a little correction up yesterday.
Now we're continuing downward.
I expect us to break below $0.90 within the next few weeks.
(Not financial advice)
BITCOIN AnalysisUpdating the last post.
BTC going down as spotted, healthy correction.
Touched the second zone I had market today and it started to have some minor pullbacks, specially if you check the 4h chart.
My expectations for BTCUSD is $43.7k as a good dip to add more buys, it's already at good price, everyday it is a good price if you're holding long term with the expectations of 100k USD, but also doing DCA it's already a good discount from what it was before.
I believe in the crypto ecosystem and this post here for me is just more like a journal to see how things pan out in the future.
I can only imagine how Michael Saylor is loading the bags now again haha
Dollar devaluation to continue - just a matter of timingJanuary we saw a steady grind higher in US equities until this week. This week felt very much like a repeat of last month, but the sell-off this time was bigger and faster. The market commentators are already speculating that this could be the start of a major correction in equities. The driving force? A rapid fall in long-term US treasury bond prices.
Bond prices suffer when inflation expectations start to materialise. Bonds pay a fixed rate of return and their face value remains fixed, which means inflation eats away at their value two-fold. By contrast, equities should benefit from inflation.
So why are equitiy prices also falling? Prices have been screaming higher ever since the Corona pandemic recovery measures were announced. This is due to record amounts of stimulus announced to try and keep interest rates low (therefore high bond prices) and encourage the economy to stay liquid. Low interest rates force investors to try and find other places to get a decent return and this fueled the equities markets. In essense, the value of equities has become relative to other assets, a function of the market as opposed to the equities actually being perceived as more valuable fundementally.
So we may have reached a potential tipping point, where bond markets are no longer convinced that the FED will be able to keep interest rates low without also triggering meaningful inflation. Since equities have become more dependent on bond prices than fundementals, we could see that inflation fears cause equity prices to fall, defying the logic that many have been touting as a reason to drive equity prices higher.
All this being said, there are lots of deflationary pressures ongoing at the moment and we won't know if inflation has really arrived for years yet. It is the new Brexit topic of financial markets and there will continue to be a strong case for both infaltion and deflation, but more importantly the timing of any real inflation. As the market tries to make it's mind up on this, there are likely to be some fairly aggresive movements in both directions. One thing that looks more certain, increased volatility could be around for a while.
The dollar has benefitted this week as nervous asset sellers move into dollar cash. Ironically, given the inflation fears that are driving the sell-off this has boosted the dollar and created a bout of short term deflation.
I see two outcomes from here, both bearish for the dollar on different timescales:
1) Inflation fears prevail, the bond sell-off continues. This would put further upwards pressure on the dollar, but then subside as assets are reallocated into inflation hedged investments such as commodities. This should then lead to a long term continuation of the dollar devaluation.
2) Inflation fears subside, and cash is redeloyed back into the bonds. This will create an immediate downside pressure on the dollar.
I favour the second option, and propse this tight stop trade for the coming week. If the stop gets hit, I would consider re-entering long later in the week.
Bearish flag at 0.786 retracementHello friends,
Here is a fairly bearish pattern that could associate with the massive push for QE and relief bills. Plus, the erupting unemployment rate doesn't look good for the US. It's a race to hyper-inflation!
Thanks for reading!
USDJPY Trading near Cricital Levelthe Weakness in the Dollar index might continue in the near term, after Donald Trump refused to start the stimulus program we saw a bounce in the DXY index.
after that a weakness started to show which put pressure on the USDCAD and retraced down from 1.3340 to 1.3240.
however the USDJPY is still holding. reaching a 4 month trend line pressure we might expect some rejection at the moment from current levels to finish a 5 wave pattern
in a falling wedge triangular setup.
missing leg might target 104.00 level.
