- The USD is still defensive for the second consecutive day, although it lacks follow -up sales.
- The technical configuration favors bearish operations and supports the perspectives of a greater depreciation movement.
- A sustained rupture is needed below the SMA of 200 periods in H4 to reaffirm the negative perspective.
The American dollar index (DXY), which tracks the dollar against a foreign exchange basket, quotes with a negative bias for the second consecutive day on Friday, although the intra -ease fall lacks the bassist conviction. The index is currently quoted around the 100.70 region, with a fall of just over 0.10% in the day, and manages to stay above the simple mobile average (SMA) of 200 periods in the 4 -hour graph.
Meanwhile, the Technical Bassist indicators in schedules/daily graphics support the perspectives of an eventual rupture below the aforementioned support, currently located near the 100.50 region. The subsequent fall could make the DXY vulnerable to extending the decline drop of this week from its highest level since April 10 and testing the minimum weekly oscillation, around the 100.00 psychological brand played on Wednesday.
Some follow -up sales will suggest that the recent recovery since the minimum of the year played on April 21 has come to an end and allane the road for deeper losses. The DXY could then fall to the intermediate support of 99.60-99.55 en route to the area of ​​99.20 and the Round Brand of 99.00.
On the other hand, the immediate obstacle is located near the region of 101.00-101.10, above which a new short coverage movement could raise the DXY to the 101.70 region. The American dollar bundles (USD) could then make a new attempt to conquer the 102.00 mark. A sustained strength beyond the latter could cancel any negative bias in the short term and pave the way for a significant movement of appreciation.
4 -hour graph of the DXY
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
