US Dollar Eyes Fed Chair Powell, Stimulus

EUR/USD Weekly Forecast: Could US 4Q GDP and the Fed revive dollar’s demand? – FXStreet

A drop to 2021 lows stays on the cards

March 3, 2021

Trying to Stop Further Collapse

March 3, 2021

US DOLLAR OUTLOOK: EUR/USD PRICE ACTION HINGES ON POWELL TESTIMONY, BIDEN STIMULUS DEAL

EUR/USD worth motion advancing towards month-to-month highs following its current consolidation
DXY Index beneath stress as soon as once more as bulls give up the 50-day easy transferring common
US Greenback appears to be like to Treasury yields, stimulus negotiations, and Fed Chair Powell for route
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The US Greenback is buying and selling on its again foot to start out the week. US Greenback promoting stress was felt throughout most main forex pairs like EUR/USD, GBP/USD, and USD/JPY. Regardless of tepid danger urge for food for equities in the course of the session, it seems that the newest stretch of US Greenback weak point largely follows the prevailing reflation trade theme as sovereign yields climb and crude oil soars. On stability, the broader DXY Index dropped -0.3% to the 90.10-price degree.

US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (25 NOV 2020 TO 22 FEB 2021)

Chart by @RichDvorakFX created utilizing TradingView

Closely skewed towards EUR/USD worth motion with a 57.6% weighting, the DXY Index has pulled again significantly during the last two weeks and simply notched a detailed beneath its 50-day transferring common. In the meantime, it appears to be like like a head-and-shoulders reversal sample could have shaped. One other push by US Greenback bears beneath the 90.00-handle might affirm a breakdown of neckline help. If materialized, this would possibly encourage follow-through decrease and produce the underside Bollinger Band into focus as a possible draw back goal. If US Greenback bulls can reclaim the 50-day transferring common, nevertheless, one other take a look at the 17 February swing excessive might come again into play.

of clients are net long.

of clients are net short.

Change in	Longs	Shorts	OI
Daily	1%	8%	5%
Weekly	-11%	-11%	-11%

USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)

In a single day implied volatility readings for choose US Greenback forex pairs have ticked increased and are perched above their respective 20-day averages. Though, when taking a look at 12-month percentile rankings, US Greenback implied volatility stay comparatively subdued. Occasion danger posed by Fed Chair Powell’s semi-annual congressional testimony scheduled to kick off Tuesday, 23 February at 15:00 GMT stands out as a possible catalyst for forex volatility.

It’s most probably that Chair Powell will reiterate the uber-accommodative stance of the Federal Reserve and wish for extra fiscal stimulus. Nonetheless, merchants might need an ear out for potential remarks on the FOMC’s willingness to maintain borrowing prices low amid the current rise in Treasury yields. One other potential driver of US Greenback volatility contains progress on passing the $1.9-trillion fiscal stimulus package deal proposed by President Joe Biden. The US Greenback might agency a bit if speedbumps on the street to finalizing a stimulus deal are encountered, although which will show short-lived.