By Nick Cawly, Strategist
Important events from the US next week are likely to add volatility to the US dollar and pairs with the dollar.
A losing week is approaching as US Treasury yields tumble after a 14-week 10% gain in the dollar.
The FOMC minutes on Wednesday will provide possible forecasts on the current state of the US economy and the pace of rate hikes, just a day before the first look at US GDP for the second quarter. On Thursday, the Fed’s PCE inflation preference will underline growing pressure in the US.
The US dollar (DXY) is strengthening in its growth, reaching its almost twenty-year high.With a lot of the expected US rate hikes already baked into the greenback, an extra driver/s will be needed if fresh highs are to be made.
The downside for the DXY looks limited with 102.25 as the first point of support. Below here 100.94 comes into play.
US DOLLAR (DXY) DAILY PRICE CHART MAY 20, 2022
The EUR/USD daily chart shows that the pair is approaching a group of previous highs up to 1.0655, and they are unlikely to be broken before the US data comes out next week. The 106.36 level is a double bottom formed in mid-March 2020, which triggered a rise to a high of 1.2334 on January 4, 2021. The volatility of the EUR/USD pair is high using the 14-day ATR, while the CCI indicator indicates that the market is entering the overbought zone.
EUR/USD DAILY PRICE CHART – MAY 20, 2022
Retail data shows that 65.68% of traders are net long, with a long to short ratio of 1.91 to 1. Net longs are 7.34% lower than yesterday and 18.00 % lower than last week, while traders net-short is 9.08% higher than yesterday and 46.27% higher than last week.
EUR/USD prices may continue to fall as traders are net long. However, traders have fewer net long positions than yesterday and compared to last week. Recent shifts in sentiment warn that the current EUR/USD price trend may turn up soon.
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