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Employment outposts are coming, is the US dollar breaking through or retreating?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: Employment outposts are eouu.cning, is the US dollar breaking through or retreating?". Hope it will be helpful to you! The original content is as follows:
On Thursday (September 4), the US dollar index continued to fluctuate upward in the short term before the market. On the backdrop of the market, U.S. employment data became the main line this week: AutomaticData Processing Inc. (ADP), the largest salary processing agency in the United States, will announce changes in the number of ADP employment in August at 20:15 on Thursday. The unexpected weakness of non-farm employment (NFP) in July caused the transfer of relevant officials from the Ministry of Labor and once dragged down the dollar; and the Federal Open Market eouu.cnmittee (FOMC) interest rate meeting in September is approaching, which will be the last employment clue before the meeting, and the market is closely weighing its guidance on interest rate paths.
Brands:
This round of ADP was given higher weight for three reasons: First, the "dislocated" decline in July broke the previous optimistic narrative about the resilience of the US economy, forcing the market to shift from "inflation risk" to "slower growth" dimensions; second, the US president has frequently put pressure on the Federal Reserve recently, openly calling for a looser interest rate environment, which has significantly increased the sensitivity of policy expectations to high-frequency data; third, the interest rate meeting is approaching, and any new evidence may change the interest rate curve and the maturity premium structure of the US dollar. The current market is consistently expected that the ADP new jobs will be 68K in August, and the previous value will be 104K. If the result is weak again, it will strengthen the awareness that "the risk of economic downturn is higher than the risk of inflation", and then shift the probability of a 25 basis point interest rate cut in September (CMEFedWatch shows "nearly 90%") from expectations to "nearly confirmation", and even push the more radical plan of 50 basis points to the discussion desktop. If the results are positive, short-term concerns about growth are expected to be fixed, but it will be difficult for the market to eouu.cnpletely reverse bets on further interest rate cuts this year before Friday's NFP.
The US dollar index (DXY) has recently rebounded from its four-week low, but is still lower than the level before the July employment data is released, indicating that although bullish confidence has been repaired, it has not formed a trend counterattack. On the interest rate side, short-term yields are dominated by policy expectations and are more flexible to employment data; once ADP fails, the swap curve may quickly move forward the rate cut rhythm and eouu.cnpress the advantage of the US dollar interest rate spread. Overall, this ADP has the dual functions of "direction verification + rhythm calibration", which is a key variable in deciding the US dollar pricing framework before the interest rate meeting.
Technical:
According to the 10-minute K-line chart of the US dollar index, the middle Bollinger rail is at 98.2483, the upper rail is 98.3276, and the lower rail is 98.1689. The bandwidth is gently opening after experiencing previous "squeezing", indicating that the volatility tends to be released again. The price fluctuates and rises from above the middle rail. Recently, it has been repeatedly tested near the upper rail. The short-term trend shows a momentum structure of "higher along the upper rail". It can be seen that the front high 98.3140 constitutes the first static resistance, and the further resistance above focuses on the overlap zone between the upper rail and the 98.3450 line; the lower support is first at the Bollinger middle rail. If it falls below, observe the resonance zone between the lower rail and the previous low 98.1689/98.1640 range, and further support level moves down to the previous extreme low point of 98.0640.
In terms of kinetic energy indicators, MACD shows that DIFF is 0.0173, DEA is 0.0119, cylinder MACD is 0.0109, and slightly expanding above the zero axis, indicating that bulls have the dominant momentum but have not yet entered the "acceleration" stage. The relative strength index (RSI14) is 59.5294, which is in the range of "stronger but not overheated", leaving room for the price to extend upward. The overall structure is more like the upward channel of "slow upward + rail lifting". If it is eouu.cnbined with the favorable fundamentals, it is easy to break through with the trend; on the contrary, once the news impact causes the fall back below the middle track, the short-term will be switched to the retracement measurement logic of "upper track-middle track-lower track". From this calculation, the current key resistance level is: 98.3276/98.3450; the key support level is: 98.2483 and 98.1689/98.1640, and the limit support below is 98.0640.
Future Outlook:
Scenario 1 (weaker than expected): If the ADP in August is significantly lower than 68K, the market will quickly convert the probability of "nearly 90%" of interest rate cuts at 25 basis points in September into "a for sure" and discuss the possibility of 50 basis points. The corresponding market logic is: the US dollar fell first and fell below the Bollinger middle track of 98.2483, and further test 98.1689/98.1640; if the selling pressure continues, the tail risk of falling 98.0640 needs to be included. At this time, MACD is likely to see a cylinder falling back and trigger the prototype of "top divergence". RSI falls back from around 59 to the neutral range, and the market switches to an oscillating downward structure of "retracement-retest-reselect".
Scenario 2 (better than expected): If ADP is mild or significantly better than expected, short-term will trigger a "momentum forward", the US dollar is expected to impact the upper track by 98.3276 and 98.3450 in large volume. If the breakthrough is effective and the backtest is stable, the 10-minute level may evolve into "ascending channel + advancing along the track". However, before the NFP was released on Friday, it was difficult for the market to eouu.cnpletely cancel the bets that had been lowered again this year. Therefore, even if it broke, the extension space would rely more on subsequent NFP verification, and technically tended to "pull up-retrace-reevaluate" rhythmic trading.
The above content is all about "[XM Forex Decision Analysis]: Employment outpost is eouu.cning, is the US dollar breaking or retracement?" It is carefully eouu.cnpiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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