US DOLLAR PRICE OUTLOOK: EUR/USD, USD/JPY AWAIT PMI SURVEYS DUE
US Greenback bears drove the broader DXY Index -0.5% decrease on Thursday. This adopted a drop in Treasury yields that fully unwound yesterday’s rise sparked by FOMC minutes, which hinted at the threat of Fed tapering. Bhighway US Greenback weak point despatched EUR/USD ripping 50-pips larger to check yearly open resistance whereas USD/JPY tumbled -0.41% on the session. The DXY Index now hovers again at a key space of technical help close to the 89.65-price degree.
DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (24 DEC 2020 TO 20 MAY 2021)
US Greenback bulls may look to defend this potential space of buoyancy underpinned by February’s month-to-month low. The underside Bollinger Band might additionally assist stymie US Greenback promoting strain. To that finish, the DXY Index arguably is beginning to look oversold right here judging by the relative strength index. US Greenback rebound potential brings the 20-day easy moving average and descending trendline into focus.
Eclipsing final week’s excessive round 90.80 may open up the door to check the 50-day easy shifting common and higher Bollinger Band. Then again, one other spherical of US Greenback weak point may steer the DXY Index towards the 89.20-price degree the place year-to-date lows reside. Taking out that degree of technical support might even see US Greenback bears set their sights on 2018 swing lows deep into the 88.00-handle. This might verify the ominous descending triangle chart pattern that seems to be forming on the DXY Index.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
Waiting for Friday’s buying and selling session on the DailyFX Economic Calendar, we see notable occasion danger posed by the scheduled launch of PMI surveys by IHS Markit. Although in a single day US Greenback implied volatility readings recommend that major currency pairs are anticipated to have comparatively little motion. EUR/USD in a single day implied volatility of 5.5%, for instance, ranks within the backside 25th percentile of measurements taken over the past 12-months.
Likewise, USD/JPY in a single day implied volatility of 4.5% is under its 20-day common studying of 5.5% and ranks within the backside 20th percentile of readings over the past yr. If US PMI knowledge emphasizes persistent provide chain disruptions and corresponding worth pressures, nonetheless, currency volatility might speed up alongside a pointy spike larger in Treasury yields as markets develop extra petrified of inflation and the danger of Fed tapering.
Hold Studying – US Dollar Outlook: USD/JPY Hinges on Treasury Yield Volatility
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