Monday, December 05, 2022

US dollar index weakens despite Monday’s trend change

The US dollar index is lower on Tuesday, limited by a rise in the euro and a slight improvement in the Japanese yen.

The single currency is rising in cautious trade, as Ukrainian and Russian negotiators were prepared to meet in Turkey for the first direct talks in more than two weeks.

Meanwhile, Japanese Yen bears are taking a breather after the currency fell to its lowest level since August 2015 on Monday. The Yen continued on Tuesday with its relentless pursuit of defending a key yield limit by offering to buy unlimited amounts of 10-year government bonds, which put even more downward pressure on the Yen.

At 09:09 GMT, the June US Dollar Index traded 99.025, $ 0.030 or -0.03% lower. On Tuesday, the Invesco DB put the US Dollar Index Bullish Fund ETF (UUP) at $ 26.49, $ 0.08 higher or + 0.30%.

US dollar index traders also monitor US Treasury market performance after the 5-year and 30-year rates reversed on Monday morning for the first time since 2006, with more purchases from the longer-date Treasurys than the shorter-date government bandages.

U.S. 5-year and 30-year treasury yields remained reversed Tuesday morning, ahead of the release of key employment data.

Daily June US Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend showed up on Monday when buyers pulled out the previous main high at 99,300. The next main target is 99,470. A trade through 97,715 will change the main trend downwards.

The slight trend is also up. A trade through 98,420 will change the slight downward trend. This will shift momentum to the downside.

The small range is 99,470 to 97,715. Its 50% level at 98,590 is support. Long-term support is the key Fibonacci level at 98,200.

Daily Swing Chart Technical Forecast

Now that the main trend has changed upwards, we would like to continue to see a pattern of higher highs and lows to drive the upward trend. Based on this assessment, the direction of the June US Dollar Index on Tuesday is likely to be determined by traders’ reaction at 99,365.

Bullish Scenario

A sustained move over 99,365 will indicate the presence of buyers. If this move creates enough upward momentum, then look for a boom to the next major peak at 99,470.

Taking out 99,470 will reaffirm the upward trend. Since the next major target is 100,560 to 100,930, the outflow of 99,470 could cause an upward acceleration.

Bearish Scenario

The inability to overcome 99,365 will indicate the presence of sellers. Taking out Monday’s low of 98,820 will indicate that the selling pressure is getting stronger. This could cause a break in the pivot point at 98,590, followed by the slight bottom point at 98,420.

Taking out 98,420 will change the slight downward trend. This will shift momentum to the downside with 98,200 the next target.

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