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The US dollar index has suffered consecutive setbacks. What kind of signal of change in the technical side is brewing?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: The US dollar index has suffered consecutive setbacks, what kind of signal of change in the technical side is brewing?" Hope it will be helpful to you! The original content is as follows:
On Tuesday (July 22), the US dollar index continued its volatile trend, eouu.cnpeting repeatedly below the 98 mark, and the overall fluctuation was in the lower edge of this week. At present, the US economic data lacks directional drive, and traders will focus on the last window of US-EU trade negotiations before August 1. Meanwhile, political differences between Trump and Fed Chairman Powell have further intensified, and market concerns about the Fed's future policy independence have heated up. Against this background, the US dollar temporarily lost its clear upward action, and the short-term consolidation pattern intensified.
Franchise
The current performance of the US dollar is affected by the interweaving of multiple factors. First of all, the prospects for trade negotiations between the United States and Europe are worrying. The EU said at the beginning of this week that it was planning a package of potential countermeasures, suggesting that the possibility of reaching an agreement before August 1 is significantly lower. If an agreement is not reached, the United States may impose a tariff of up to 30% on EU goods, which may trigger further market concerns about the global economic outlook and suppress demand for the dollar.
In addition, the conflict between Trump and Powell continues to ferment. Although Treasury Secretary Bessent publicly supports Powell to remain in office until the end of his term, Trump has expressed his desire to replace the Fed chairman. This direct impact on the Fed's independence has intensified market risk aversion and restricted the US dollar. At the same time, Bessent stressed that the Fed should initiate a "comprehensive review" of non-monetary policy functions to further amplify the market's eouu.cnplex expectations of policy prospects.
Technical:
The current K-line structure of the US dollar index shows that since the high point of 104.7099, the overall pattern has been maintained and has been running below the middle track of the Bollinger Band, which is weak in the short term.
In terms of the Bollinger band, the three rails show a convergence trend, the upper rail is suppressed at 99.2271, the lower rail supports at 96.4615, the current index is in the middle and lower rail range, and the Bollinger band width continues to shrink, indicating that the price will soon choose the direction.
In terms of K-line pattern, it gradually rebounded after hitting a stage low of 96.3729, but the current high has not yet broken through the 99.00 integer level, forming a low-level consolidation box pattern, lacking effective breakthrough action to increase volume.
RSI indicator is 46.9039, still below the 50 central axis, indicating that the current market momentum has not tilted significantly towards the bulls, and the overall situation is still a weak oscillation pattern. If it cannot effectively break the pressure zone above 50, it will be difficult to establish a rebound in the US dollar.
Previous market sentiment observation
Overall market sentiment shows a significant wait-and-see trend. On the one hand, the market is cautious about the final results of the US-EU negotiations, and is also skeptical about the independence and credibility of the Fed's future policies; on the other hand, the technology is in an undecided oscillating area, which has also prompted both bulls and bears to fail to form consensus expectations.
Overall, the current market tends to be more risk aversion mentality. The traditional role of the US dollar as a safe-haven asset has not been effectively played, reflecting that policy uncertainty is dominating the market psychology.
Future Outlook
Short-term Outlook:
The US dollar index has been operating between 96.46 and 99.22 for more than one month, which is a typical oscillating bottoming process. If it can effectively stand firm in the 97.84 line and break through the middle rail suppression in the short term, the US dollar is expected to challenge the 99.00 area. However, if it falls below the 96.37 low again, a new round of downward space will be opened, and the possibility of back-testing of the 95.50 area will not be ruled out.
Bulner Outlook:
If there is positive progress in subsequent trade negotiations, coupled with the Fed's maintenance of policy autonomy, the US dollar may usher in a phased technological rebound. We need to pay attention to the strong resistance of Bollinger's upper track of 99.22. If the volume breaks through, it is expected to open up space for further rebound to 100.24 or even 102.50.
Bell prospects:
If the US-EU negotiations are eouu.cnpletely broken, or if the Fed policy faces external interference, the market confidence collapses, the US dollar may continue its previous downward trend. The first support below is still 96.37. After falling, the 95 mark will be tested, and the bear target will further down to the 94.20 range.
The above content is all about "[XM Foreign Exchange Decision Analysis]: The US dollar index has suffered consecutive setbacks, what kind of change signal is brewing in the technical aspects?" It is carefully eouu.cnpiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some content in the article still needs to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues:
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