US DOLLAR CURRENCY VOLATILITY EYES TRADE WAR DEVELOPMENTS & RECESSION RISK
- The US Dollar[1] edges slightly lower after skyrocketing higher earlier in the week
- USD[2] price action next week will likely focus on how future Fed monetary policy decisions will be impacted by trade war developments and recession risk
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The US Dollar is starting to recede from its recent ramp this week, but the greenback remains broadly higher judging by the 0.64% rise in the DXY Index over the last 5 days. Friday’s slight pullback could be explained by this morning’s mixed bag data dump on US inflation and durable goods orders, which sent Treasury yields on a drift lower. [4]
USD weakness was exacerbated slightly after downbeat headlines crossed the wires that US President Trump is weighing restrictions on capital flows to China in the latest trade war escalation. Although, given the greenback’s posturing as a safe haven currency, US Dollar downside has been stymied amid broad risk aversion in response to the aforementioned developments. [5][6]
DXY US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (MARCH 27, 2019 TO SEPTEMBER 27, 2019)
Chart created by @RichDvorakFX with TradingView[7][8]
The confirmed breakout above technical resistance around the 98.50 price level underscored by the 23.6% Fibonacci retracement of the US Dollar’s bullish leg since late July could be looked to as support going forward if the DXY Index drifts lower next week. The upward sloping 20-day simple moving average could also help keep the US Dollar afloat going forward, which we have been highlighting regularly in our daily US Dollar price volatility report.
