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US DOLLAR CURRENCY VOLATILITY – EURUSD FIXATED ON ECB & FED MONETARY POLICY UPDATES

  • US Dollar price action remains juxtaposed between looming ECB and Fed interest rate decisions
  • EURUSD[1] 1-week implied volatility of 6.56% ranks in the top 70th percentile of readings as high-impact event risk on deck stands to send the world’s most-liquid currency pair swinging
  • Read up on How Central Banks Impact the Forex Market[2]

The DXY[3] Index, a popular bundle of US Dollar currency pairs, remains anchored to its choppy trading range between 98.00-98.50 while forex traders anxiously await monetary policy updates from two of the world’s largest central banks. The DXY Index stands to be impacted by EURUSD in particular seeing that it comprises a hefty 57.6% of the benchmark’s total composition.As such, US Dollar price action so far this week, on balance, is characteristic in light of the September ECB meeting that looms as markets speculate over its upcoming interest rate decision this Thursday. [4]

DXY INDEX – US DOLLAR PRICE CHART: DAILY TIME FRAME (MARCH 22, 2019 TO SEPTEMBER 10, 2019)

DXY Index Price Chart US Dollar Technical Analysis

Chart created by @RichDvorakFX with TradingView[5][6]

We noted in yesterday’s US Dollar price volatility report that the DXY Index seems to be clinging onto its 20-day simple moving average while fluctuating between the 38.2% and 23.6% Fibonacci retracement levels extended from its June 25 low to September 03 high. The US Dollar Index may find a bit of buoyancy in the short-term if technical resistance previously identified by the swing highs printed back in late April and middle of May around this price level serves as confluent support going forward. One concerning aspect of the US Dollar’s technical backdrop is the MACD

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