After the bursting of the new round of trade war, the market started to go short the US 10-year treasury bond. Meanwhile, the dollar index slumped drastically to 93.89. The majority holds the view that US dollar would enter recession cycling and the adjustment of the rate would be the cut-off point to drop off the cliff.
Some key indexes to analyze the overnight market. The official releases the US unemployment claims for the week ended Sep 14, the lowest since November 1969 and better than the estimated 210k. So was the Continuing jobless claims turned out to be 1.645 million better than the 1.705 million expected. More good news on manufacturing industry and. Fed Manufacturing Index for September leaped to 22.9, doubling 11.0 in August and 5.9 above the expected level. The positivity from the fundamental view was not revealed in the forex market as the EUR/USD kept soaring to the highest since July. The other USD-related pairs tended moved unfavorably against USD as well respectively. The situation seems counter-intuitive, but the broader view could account for the abnormal pattern. The settle down of the trade tension between America and China reduce the uncertainty and volatility of the risk in the market. The moment suggests the investor could take a bold move currently. Higher-yield asset with less liquidity could be in the portfolio for the USD holder. Hence, selling trend presently reassured the strengthened American economy and the expected rate hike would be the kinky point for a relatively weak dollar index line.
Events drivers affected Eu seems to be flat, but more events to anticipate in the following days. The first thing to focus on is the Market manufacturing PMI for September. The contrast with the USA would be determinative for the short-term trend of the pair. The second stuff is the Italian Budget dilemma. Due date 27th September is very close for the Italian coalition government to sign a valid, inaugural budget. PM Conte prefers plan in compliance with the EU budgetary rules while coalition could not reach a unanimous agreement.
From a 4h chart (GMT +3), The pair revisited the support level in July, and the long position faces enormous pressure to break through. The RSI is slightly over 70 which suggested a bearish divergence may occur in the short-term. The possible support level could be on 1.17629 which is the 5 SMA. Moreover, the new resistance level could be on 1.1840 which is high in June.&nbsp;

Is the USD going to encounter a big shot?

Dec 01 2020