EURUSD DXY Analysis

DXY Fundamental & Technical Analysis

Today's early morning economic news sparked volatility within the markets, the foreign exchange currency market saw a rise in non US major currencies, but also saw a decline later on as the US dollar strength index finished higher in the New York trading session. The US PPI (Producer Price Index) month over month economic report showed an actual: 0.2%, forecast: 0.4%, and had a previous value of 0.2%. This showed that the price of goods and services had a value that was less than expected though the value did not change compared to the last month. This perhaps showed that inflation was still steady from the PPI report, the lower than expected value may have stirred some bearishness within the US dollar but did not last during the New York session as the greenback rose to finish the session strong. Tomorrow the US will be releasing Retail Sales (MoM) data for October which is set to shake the market. Canada will also be releasing a Core CPI report (previous 0.4%) for the month of October if you are watching the USDCAD currency pair which currently sits at 1.32790, off its highs. In other economic news Great Britain will be releasing a CPI (YoY) report tonight (expected: 10.7%, previous: 10.1%) which may aid in the fundamental strength of the pound sterling.
Over the next month or two much of the large population in the US will partake in high spending over the Thanksgiving and Christmas holidays, which will spike US Retail Sales data. This can aid the DXY bullish strength over the holidays fundamentally as the United States is a dense population.

Technically the DXY still trades above the daily 200 day simple moving average but draws near. All US major currency pairs trade above it as well except for the USD against the Swiss franc which moved below the 200 daily sma this week, this was the first time since August. The euro recently moved above the 200 daily sma this week but soon climbed back below, this was the first time since July 2021, US dollar strength technically may be losing strength longer term. Non US major currency pairs such as the euro, pound sterling, Japanese yen, Australian dollar, and New Zealand dollar all trade below the 200 day simple moving average.

The DXY has been pushing strongly against the daily lower bollinger bands indicating a potential oversold state. We may see a reversal soon on the daily chart as momentum forms on other oscillators. Longer term the DXY index can see a stronger decline next year technically as the monthly chart shows signs of being overbought. As the federal funds rate approaches 5% and interest rate hikes slow, bullish interest in the greenback can decline which can potentially be fundamentally bearish for the US dollar in 2023. Stocks can perform well next year along with cryptocurrencies as this cycle forms, though we still may be some months away from this phase. The S&P500, Nasdaq100, and Dow Jones stock indexes all show strong oversold signs on the monthly time frames.
Oil recently saw lows of 76 dollars a barrel in September and should continue to decline next year. Banks and traders await US Retail Sales data tomorrow during the early New York Session. In other current global news a stray unclaimed missile has hit a Polish village, Russia denies firing the missile. EEUR/USD USD Currency Index

Ilyas Khan Top1 Markets