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18.05.202314:42 Analisis Forex & Kajian: Dollar: entering short positions is risky for the deposit

Exchange Rates 18.05.2023 analysis

The dollar continues to strengthen on Thursday, supported by the growth in U.S. government bond yields. As of writing, the dollar index (DXY) was near the 102.94 mark. As we noted in our recent review, in order to develop an upward dynamic and more confident growth towards last year's high of 105.87, the price needs to break through at least two strong resistances at 102.75 and 103.00. As of yesterday, the 102.75 level was breached, and today the price of DXY futures closely approached the 103.00 resistance level.

As long as investors actively dispose of government bonds, the market situation will play in favor of the dollar.

Yesterday, Democrats were collecting signatures for a petition to raise the debt ceiling, according to media reports. "We must raise the debt ceiling now and avoid economic catastrophe... to ensure that America pays its bills," they stated in their appeal.

On Wednesday, U.S. President Joe Biden said he was confident in reaching a budget agreement. Otherwise, if the U.S. could not pay its bills, it would be a disaster. He also announced that a press conference on debt will be held on Sunday. "We're going to come together, because there's no alternative," Biden declared.

Exchange Rates 18.05.2023 analysis

As the saying goes, we'll live and see, but most likely, the debt ceiling will be raised again, the Fed will intensify dollar printing, fuelling inflation. Will the dollar benefit from this; will the Fed have to further tighten monetary conditions, raising interest rates?

In more or less normal economic conditions, an increase in the interest rate strengthens the national currency. But there are plenty of cases where, after the central bank raised the interest rate, the country's national currency, on the contrary, weakened. It's not ruled out that the dollar awaits exactly such a fate.

We should not jump ahead, predicting events that do not depend on our opinion. For now, the dollar is strengthening, and entering short positions against it in the current situation, when the yield of American bonds continues to grow, poses problems for the deposit.

Exchange Rates 18.05.2023 analysis

From a technical perspective, the DXY index (CFD #USDX in the MT4 terminal) is developing an upward dynamic, moving towards the key resistance levels of 103.55 (50 EMA on the weekly chart), 103.75 (200 EMA on the daily chart). To enter the medium-term bull market zone and return to the long-term upward trend, the price needs to break into the zone above these resistance levels.

In an alternative scenario, the fastest signal for short positions will be breaking through the short-term support level of 102.74 (200 EMA on the 15-minute chart), and the confirming one – breaking through support levels 102.12 (200 EMA on the 4-hour chart), 102.00.

Support levels: 102.74, 102.40, 102.24, 102.12, 102.00, 101.50, 101.00, 100.80, 100.40, 100.00, 99.25, 99.00

Resistance levels: 103.00, 103.55, 103.75, 104.00, 105.00, 105.85

* Analisis pasaran yang disiarkan di sini adalah bertujuan untuk meningkatkan kesedaran anda, tetapi tidak untuk memberi arahan untuk membuat perdagangan.

Jurij Tolin,
Analytical expert of InstaSpot
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