Introduction
The Dollar is trying to hold off from a tremendous re-balancing as the Euro begins to gain steam against the greenback. There had to be a time when, eventually, the hyper-money printing during COVID-19 would have its effect. Are we seeing that now?
The Fed recently cut rates, and they signal that further rate cuts will come in the future. This i weighing on the Dollar heavily so might it be time to move to the Euro, or the Yen, or something else?
Lets look at the technicals and see what we could expect for the remainder of 2024.
Technical Analysis
There was a symmetrical triangle that formed on the weekly chart, and DXY recently broke below the lower support level. It has been six weeks since the bearish break and there hasn’t been a re test of the support level and all the candles have been red weekly closes except for one. It is difficult to track volume on the DXY chart as it doesn’t directly measure trades taken so we cant confirm the strength of the breakout using that metric.
There are two important levels we can watch, however: the 100.617 level (Pink Line) and the 99.589 level (Green Line). These are two support levels that bulls need to hold if the price has a chance of recovering in the short to medium-term. At the moment, they are holding but only just.
The Super Trend is now red and has been fluctuating for the time the price was consolidating within the triangle. We can monitor this indicator IF the prices continue to move lower. If we see prices fall below the support levels, a monitor of the strength of the trend can be used with this indicator.
What happens if we see it break below the support?
Measuring an extension of the symmetrical triangle, the target is 95.031. The move could be swift as traders offload their Dollars for other currencies, especially if the Fed signals further rate cuts.
What this means for stocks
Stocks should benefit from this as well as Gold. UNless there is a serious world event, which is not unlikely at this point, we should see the US stock market rally continuing as the Dollar loses value.
