Has the dollar seen its weekly lows against its counterparts?
Let’s take a look at the Dollar Index’s 1-hour chart!
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/CHF’s short-term range ahead of New Zealand’s quarterly inflation report. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
New York manufacturing activity contracts for a third month, down to -9.1 in Oct
BOC survey: Canadian firms see recession coming as inflation expectations stay high
U.K. Finance Minister Jeremy Hunt drops most of U.K. tax-cut planChina delays release of key economic data amid party congress
New Zealand inflation stays near 32-year high at 7.2%, fueling RBNZ bets
RBA’s meeting minutes: smaller increase was warranted given the pace and lagging effect of the “substantial” rate hikes
RBA: further interest rate hikes “likely” over the period ahead
BoE set to further delay sales of government bonds until markets calm – FT
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone ZEW economic sentiment at 9:00 am GMT
German ZEW economic sentiment at 9:00 am GMT
Canada’s housing starts at 12:15 pm GMT
U.S. industrial production at 1:15 pm GMT
U.S. NAHB housing market index at 2:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: U.S. Dollar Index (DXY)
U.S. Dollar Index 1-hour Forex Chart
With not a lot of top-tier U.S. data scheduled for release, the markets had time to price in U.K. Chancellor of the Exchequer Jeremy Hunt reversing Liz Truss’ planned tax cuts.
It also didn’t hurt that an inflation report from New Zealand and the release of the Reserve Bank of Australia’s (RBA) meeting minutes pointed to more interest rate hikes from the RBA and Reserve Bank of New Zealand (RBNZ).
The risk-friendly trading environment did the dollar some damage, enough to drag the U.S. dollar index from Friday’s 113.45 highs all the way to the 112.00 psychological handle.Has the dollar seen its weekly lows against its major counterparts?
On a technical basis, it’s looking like the dollar has found support at 112.00. As you can see, the area is serving as a range support on the 1-hour time frame.
Meanwhile, Stochastic has just left its oversold levels and is gaining momentum for a move higher.
I’m not seeing any top-tier economic data from the U.S. today so the dollar’s price action will likely center around market sentiment.
Keep close tabs on the U.S. earnings reports which could paint a bullish or bearish picture of the economy.
Of course, traders can also go back to pricing in higher interest rates that will likely lead to recessions for the world’s largest economies.
A round of risk aversion could push DXY back to the 112.75 mid-range levels if not the 113.50 range resistance area.
Continued dollar selling, on the other hand, could drag the dollar below 112.00 and probably inspire a retest of the 111.70 or 110.80 previous inflection points.
