Strong US Dollar Dominates Forex: For How Long?

FXOpen

According to ICE data, the price of the US Dollar Index futures contract has reached its highest level since May 2 of this year.

This strength is reflected in the exchange rates of major currencies against the US dollar:

→ The USD/JPY rate has reached a record high since 1986, which we reported yesterday. Today, 1 USD was worth more than 161 yen.
→ The NZD/USD rate has dropped to its lowest level since May 15.
→ The USD/CHF rate has risen to its highest level since June 3.

Regarding the euro, the strength of the US dollar has pushed the EUR/USD rate down to significant support.

Technical analysis of the daily EUR/USD chart shows:
→ The price is in a large narrowing triangle (shown by blue lines) with a median around 1.07800;
→ Uncertainty related to political events in the Eurozone has also contributed to the euro's weakness, and today the EUR/USD price is at the lower boundary of the triangle. Since early June, the EUR/USD price has fallen by approximately 2%, forming a descending channel shown in red.

The proximity to the lower boundary of the triangle presents traders with two basic scenarios to consider:
→ A rebound and return to the median;
→ A bearish breakout of the triangle (e.g., with a weak intraday bullish rebound).

Which scenario will be realised largely depends on today's publication (at 15:30 GMT+3) of the PCE index values. It is possible that signals of slowing inflation will be perceived as a sign of an imminent Fed rate cut. Consequently, this could weaken the strength of the USD.

Read analytical EUR/GBP price forecasts for 2024 and beyond.

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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.

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