The higher-than-expected inflation data for January has reignited concerns about rising prices and its implications for Federal Reserve policy. While investors had anticipated rate cuts in the near term, the hot inflation print may delay such actions. As the Fed navigates the delicate balance between containing inflation and...
Key Moment For The USD.
2023-08-22 • Updated
Emerging market countries, including the BRICS bloc, are expressing frustration with the US dollar's dominance in the global financial system. While there have been discussions about creating alternative currencies to challenge the dollar's dominance, no concrete proposals have emerged. Instead, these countries are considering expanding trade using their own currencies to reduce reliance on the dollar. Critics from emerging economies are especially worried about the US using the dollar's influence for imposing financial sanctions and the destabilizing impact of dollar fluctuations on their economies, including increased costs for repaying dollar-denominated loans and purchasing imported goods priced in dollars. Let’s see how the technical factors align.
US Dollar - D1 Timeframe
The bullish move on the US Dollar seems to be finally wearing off, albeit slowly. At the moment, price appears to have broken out of a wedge pattern on the 4-Hour timeframe, which could suggest the onset of a bearish move that could slide as low as the 50% of the Fibonacci retracement. Other confluences on this include:
- The trendline resistance;
- 200 SMA resistance;
- Overall bearish market structure.
EURUSD - D1 Timeframe
EURUSD has reached a demand zone that overlaps with trendline support and could be well considered within the area of the 50 and 100-period moving averages. The demand zone can also be considered to have occurred within the range of the 88% of the Fibonacci retracement zone. These confluences point towards the likelihood of a bullish impulse.
GBPUSD - D1 Timeframe
Price action on GBPUSD has now completed a rejection from the demand zone and seems very clearly poised for a bullish movement. As deduced from the charts, we can see price has made a move away from the 88% of the Fibonacci retracement (which is a key level), and coupled with the confluences from the trendline support, the demand zone, the 100-period moving average support, and the bullish array of the moving averages.
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