Dollar: immediate prospects

Dollar: immediate prospects

22 December 2022, 12:55
Yuri Papshev

The DXY dollar index leaves no attempts to update new (since the end of June) lows. Last week, DXY futures touched 103.40, the lowest since June 29, and this week three times (Tuesday, Wednesday, Thursday) came close to it again. At the time of writing this article, the DXY was at 103.69, 26 points above today's low.

Market participants are still under the impression of the Fed meeting that ended last week. As we noted in one of our recent reviews, “Many economists are already predicting the Fed will cut the size of the rate hike again in early 2023, moving on to 0.25% hikes in February and March.” And this is a harbinger of a deeper drop in DXY. “The first signal for new short positions (we noted in our review: DXY on the eve of the most important events) will be a breakdown of the local support level and EMA50 on the weekly chart of the DXY index (CFD #USDX in the MT4 trading terminal), passing through 104.50, and the "round" support level 104.00".

As for today's economic calendar (see also Most Important Economic Events of the Week 12/19/2022 – 12/25/2022), today at 13:30 (GMT) a whole block of important US macro statistics will be published, and we should expect the dollar to strengthen during the American trading session. However, you also need to be prepared for its decrease, especially if the data does not live up to expectations, i.e. will be revised for the worse.

Tomorrow, market participants will closely follow the publication (also at 13:30 GMT) of data on orders for durable goods in the US and data on personal income/spending of Americans. All of these are important indicators for the dollar. In other words, we are waiting for an active increase in volatility at the end of the week, providing interesting trading opportunities in the end .

Support levels: 104.00, 103.52, 103.00, 102.00, 101.00, 100.00, 99.00, 98.40

Resistance levels: 104.37, 104.50, 105.50, 106.13, 106.65, 107.65

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