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"Badministrative" will be gone? The US dollar index rebounded slightly, and the support of the trend line is hidden in the reversal mystery
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Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: "Badmineering", all out? The US dollar index rebounded slightly, and the support of the trend line is hidden in the mystery of reversal". Hope it will be helpful to you! The original content is as follows:
In the early trading of the Asian market on Friday (August 8), the US dollar index rebounded slightly by 0.15%, and is currently trading around 98.24; on Thursday, the US dollar index closed down 0.15%, with an intraday low of 97.92. The exchange rate rebounded on Friday after falling near this position. The non-agricultural employment report was lower than expected and the number of non-agricultural employment in May and June was significantly revised downward, becoming a key straw that crushed the market's confidence in the "health of the US employment market". In addition, the increase in interest rate cut expectations have driven the US dollar index to continue its adjustment trend.
However, looking at the deep logic through short-term fluctuations, the downward space of the US dollar may be difficult to amplify. At the trading level, the US dollar index has fully absorbed the rise in expectations of interest rate cuts, and has a large decline recently, and there is a possibility of short-term rebound, limiting the short-term downward space.
From the policy perspective, against the backdrop of a rebound in inflation, the Federal Reserve's interest rate cut faces the actual constraints of "pushing up long-term interest rates and increasing economic burden", which has formed a tug-of-war with Trump's interest rate cut demand, which makes it difficult for loose policies to be as radical as market expectations; at the same time, it weakens the impact of interest rate cuts on the US economy. This makes the US dollar index more restricted by data on U.S. fundamentals and expectations of the U.S. economy rather than predictions of the Fed's attitude toward rate cuts.
The performance of American consumers is still strong, while Powell pointed out that the current economic background seems stable, inflation continues to rise and unemployment remains low, all of which indicate that the current policy is not too strict.
The dollar has been weak this year, and this trend has rapidly intensified after the release of last week's non-farm employment report. The Fed seems not ready to cut interest rates, but market expectations for a rate cut are rising, and the Fed watches FedWatch to show the probability of a 25bp cut in September has risenTo 91.8%, it became an important factor driving the weakening of the US dollar. President Trump has a tough attitude towards the matter. He has eouu.cnmented on the matter several times since he threatened to fire Jerome Powell after CPI rose.
Paraconically, amid the backdrop of rising inflation, interest rates may actually push up long-term rates – similar to what happened last year. This may make mortgages more expensive, and thus drag down economic growth as a barrier before next year's U.S. election.
The current debate over the US dollar is extremely eouu.cnplex, and the original traditional monetary policy issues are filled with political differences. President Trump hopes to cut interest rates to stimulate the economy, which is his usual strategy during his first term and continues this idea in the first six months of his second term. Current interest rates are still relatively high, and the Fed seems not ready to cut rates so far. The Fed initially kept interest rates unchanged on the grounds that tariffs would raise inflation, but now it can use inflation as a warning sign against loose policies.
It is certain that the rate cut implemented before the election last year pushed up inflation at the beginning of this year, but the Fed did not seem to be publicly responsible for it. Instead, they pointed out that supply chain tensions caused by tariffs can boost inflation. Although this claim has not really eouu.cne true, inflation has continued to rise after rising at the beginning of the year, and now there is clearly a real risk of similar scenarios to last year.
When the Fed cut interest rates last year, future inflation expectations rose, which in turn pushed up long-term interest rates - almost contrary to the Fed's expectations or hopes. Currently, the 30-year Treasury bond yield is still close to 5%, which has put a lot of pressure on interest rate-sensitive markets (such as the mortgage market).
Nevertheless, U.S. consumers still perform strongly, which helped stocks stay high and even close to their all-time highs, although many issues surrounding economic forecasts continue to rise.
The Fed did not show preparations for a rate cut last week. Powell pointed out that the current economic background seems stable, inflation continues to rise and unemployment remains low, all of which indicate that the current policy is not too strict.
The market's reaction to this was a breakthrough rise in the US dollar, a trend that continued last Thursday (July 31). With the release of the core PCE report, data once again showed that U.S. inflation was rising, similar to the trend of the CPI report released on July 15.
But the non-farm employment report last Friday (August 1) was exactly the turning point that the dollar bears were expecting: the key data did not meet expectations, and the data in the first two months was significantly revised downward, which raised doubts about the health of the job market that Powell talked about less than 48 hours ago.
Technical Analysis
The US dollar index is a eouu.cnplex eouu.cnposed of a variety of base currencies, of which the euro accounts for 57.6% and the Japanese yen accounts for 13.6%. Therefore, if the US dollar wants to continue to fall, it may at least require the coordinated promotion of the euro and the yen, which is also a key issue facing the current market. The dollar's April decline tested support around 98.00and triggered a four-week rebound.
Thereafter, resistance was at 102 Fibonacci level, while the dollar continued to weaken in early June, hitting a three-year low. But since then, it seems difficult for bears to regain control of the situation, and July has formed a trend of gradually rising bottom. This brings us to the present moment - the question is whether we can form another higher low.
From the daily chart, the US dollar index reached the upward trend line support since early July approaching early July. Before falling below this position, there is a certain rebound opportunity for the US dollar index.
At 14:13 Beijing time, the US dollar index is now at 98.22.
The above content is all about "[XM official website]: "Badministrative", all out? The US dollar index rebounded slightly, and the near trend line supports hidden reversal mystery". It was 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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