The DXY continued trading lower overnight as the price broke below the 104.40 support level (now turned resistance) and looks on track to test the round number support of 104.
This move lower is most likely driven due to the strength of the Euro as ECB member Holzmann indicated the need for 4 more 50bps rate hikes, which saw the EURUSD climb steadily to the upside to approach the 1.07 resistance level.
With Chair Powell due to testify at Congress today, expect to see higher volatility on the DXY. With markets anticipating a hawkish sentiment from the Feds, the DXY could bounce from the 104 support level to retest the 104.40 resistance level.
However, in a trend-following scenario, we could look for the DXY to break beyond the 104 key support level to trade down to the next support level of 103.78.
In summary, brief downside potential with the likelihood of a rebound if the Feds (Chair Powell) conveys a strong hawkish sentiment.
This move lower is most likely driven due to the strength of the Euro as ECB member Holzmann indicated the need for 4 more 50bps rate hikes, which saw the EURUSD climb steadily to the upside to approach the 1.07 resistance level.
With Chair Powell due to testify at Congress today, expect to see higher volatility on the DXY. With markets anticipating a hawkish sentiment from the Feds, the DXY could bounce from the 104 support level to retest the 104.40 resistance level.
However, in a trend-following scenario, we could look for the DXY to break beyond the 104 key support level to trade down to the next support level of 103.78.
In summary, brief downside potential with the likelihood of a rebound if the Feds (Chair Powell) conveys a strong hawkish sentiment.
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Could this be a sign for whats to come? Bringing 105 resistance back into focus