Market Analysis: The US Dollar Strengthens to a Maximum of Six Months

FXOpen

On Tuesday, financial market participants received a piece of data that gives signs of a slowdown in economies in different countries. Namely, the PMI index (an index of purchasing managers, which is considered a leading economic indicator) showed a negative trend in China and a number of European countries.

This led to a decrease in exchange rates against the US dollar.

Today, the US PMI data will be released, which is likely to affect the current strength of the US dollar index, as well as provide important information for the Fed's interest rate decision. The next meeting will be held on September 19-20.

According to the CME FEDWatch tool, there is a 7% chance that rates will be raised in September. However, the probability that it will be increased by the end of the year is about 45%.

“I can well imagine, from what I see so far, that we might have to go a bit higher, that we might have to raise the policy rate a bit more,” Cleveland Fed President Loretta Mester said in an interview with German newspaper Börsen-Zeitung published on Tuesday.

The EUR/USD chart shows that the rate is approaching an important support — the level of 1.07.

Bearish arguments:

→ throughout August, the EUR/USD rate was in a downtrend. And trends can last longer than market participants think. Growth resistance can be expected from the median line of the channel and its upper border.

→ PMI data in the US may be stronger than in Europe, and this will further strengthen the dollar against the euro.

→ level 1.0838 is seen as a local resistance.

Bulls can look to the 1.07 level, an important support that reversed the bearish momentum in the summer. It is possible that something similar will happen again in the fall. In case of a bearish breakout, the 1.07 level will become an important resistance.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Forex Analysis

USD/JPY Technical Analysis: Yen Strengthens after Comments from Japanese Officials The American Currency Resumes Its Growth Australian Dollar Weakens amid Inflation News Exchange Rates Consolidate at the Beginning of the Week The US Continues to Trump the Euro Economy on Key Metrics, But What Is Next?

Latest articles

Forex Analysis

USD/JPY Technical Analysis: Yen Strengthens after Comments from Japanese Officials

This week has raised alarm bells for USD/JPY market participants who are trading the bullish momentum that has been going on since early 2024 (shown in the blue curved lines on the USD/JPY chart): → Vice Finance Minister Masato

Forex Analysis

The American Currency Resumes Its Growth

The American currency, despite a rather multidirectional fundamental data, resumes growth at the end of February. In the main currency pairs, one can observe both rebounds from key levels and continuation of the main trends. Thus, the USD/CAD pair

Cryptocurrencies

BTC/USD Price Exceeds $60,000 Per Coin

Several factors contributed to this: → Effect associated with the approval of Bitcoin ETF. The media writes that investments in these financial instruments amount to about 9k bitcoins per day, and miners produce only 900 bitcoins per day. The total investment

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65.68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.