Crédit Agricole: USD Growth Isn't Over Yet

Crédit Agricole: USD Growth Isn't Over Yet

2021-10-15 • Updated

The rally of the US dollar has stopped for a while. That allowed risk-on assets (GBP, NZS, AUD, stocks) and also gold to recover some losses. Gold and the US dollar have a negative correlation. When the USD weakens, gold tends to rise, and vice versa. Traders are interested in the further movement of the US dollar as almost the entire market sentiment will depend on it.

Let’s understand why the market sentiment has improved. There is no clear catalyst for this turnaround in investors’ mood. We may assume that one of the reasons is the ongoing earnings season. Investors are concerned about global economic growth because of the high energy prices, supply chain problems, and inflation pressure. That worries were outweighed by the better-than-expected earnings results of companies.

Is the current weakness in the USD short-lived? Could be! The Federal Reserve is going to start tapering already in November and raise rates in 2022. According to Crédit Agricole, the higher interest rates in the US can push the USD up as 1) it will reduce the USD liquidity and 2) increase demand for the dollar as its yields will increase.

*Earnings season is the period when companies uncover their financial results for the previous quarter.

If the forecast of Crédit Agricole is correct, we might expect USD/JPY to rally up to 115.00 and then higher and higher.

What about EUR/USD? The pair is likely to keep trending down. If it breaks the low of late September at 1.1570, it may fall to October trough at 1.1525 and then to the psychological mark of 1.1500.

EURUSDDaily (2).png

What does it mean for gold? The continuation of the downtrend as well. If it manages to break below the support zone of $1740-1750 at October lows and the 23.6% Fibonacci level, the doors to the September low at $1725 will be open.

XAUUSDDaily (1).png

LOG IN

Similar

XAUUSD: Will Gold Continue to Rally?
XAUUSD: Will Gold Continue to Rally?

Last week I gave a trade idea on XAUUSD with a target around the $2,020 price line. At the time of writing, XAUUSD already exceeded the target and I’m sure that would leave a lot of people wondering what to expect next. Below, I have presented my view of how I expect the price action to turn out in the meantime.

AUD: Trade Ideas
AUD: Trade Ideas

Last Tuesday, the Australian dollar experienced its steepest drop of the year, falling by 1.18%, following higher-than-expected US inflation figures, which boosted the US dollar. However, the Aussie has since rebounded and is now trading at a two-week high against the US dollar. Investors are...

NZD: The Week Ahead
NZD: The Week Ahead

Commerzbank's analysis suggests a brighter outlook for the New Zealand Dollar (NZD) in the coming months despite recent downward pressure. Factors like broader U.S. Dollar strength and domestic issues have kept the NZD below last year's highs. However, robust labor markets in both New Zealand and Australia and an expected...

Latest news

USD Expected To Recover Some Strength
USD Expected To Recover Some Strength

In the early hours of Tuesday, the US Dollar faces challenges in maintaining its strength against major currencies, with the US Dollar Index struggling to surpass the 104.00 mark. Investors are eagerly anticipating the release of key economic data, including January Durable Goods Orders and the Conference Board's Consumer Confidence Index for February. Additionally, the economic calendar includes reports...

CAD: Price Delivery Suggests Strength
CAD: Price Delivery Suggests Strength

In the early hours of Tuesday, the US Dollar faces challenges in maintaining its strength against major currencies, with the US Dollar Index struggling to surpass the 104.00 mark. Investors are eagerly anticipating the release of key economic data, including January Durable Goods Orders and the Conference Board's Consumer Confidence Index for February. Additionally, the economic calendar includes...

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera