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market analysis
Powell's speech becomes key, the direction of the dollar is about to be revealed
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Review]: Powell's speech becomes the key, and the direction of the US dollar will be announced soon." Hope it will be helpful to you! The original content is as follows:
On Wednesday (July 30), the US dollar index temporarily stopped after four consecutive days of rising, and trading around the 98.80 line during the European period showed a high consolidation trend. Global market sentiment has become cautious and the wait-and-see atmosphere is strong, and traders generally focus on the Fed's interest rate meeting. The CMEFedWatch tool shows that the market is almost sure that this meeting will keep interest rates unchanged, with the probability of maintaining them in the range of 4.25% to 4.50% as high as 97%. However, what the market really cares about is not the resolution itself, but the guidance on the future monetary policy path that Federal Reserve Chairman Powell may release in the post-conference press conference.
French fundamentals
The current driving force of the US dollar trend mainly www.xmspot.comes from two aspects: one is the market's game over the direction of the Federal Reserve's policy, and the other is the risk aversion demand brought about by external macro uncertainty. Although the US labor market is still resilient, the recent inflation data and economic growth indicators have performed differently, which has intensified the market's expectations of future economic paths. In particular, the upcoming Q2PCE price index and July non-farm employment data will become an important signal to evaluate whether the US economy has "soft landed".
On the political level, the pressure from the US government on the Federal Reserve is also a variable that interferes with market pricing. President Trump once again publicly criticized Fed Chairman Powell. Although the market generally expects no recall action, such remarks still cast a shadow on the Fed's independence and pose a potential threat to the US dollar's medium- and long-term credibility.
In Europe, the new trade agreement between the United States and the European Union injects some optimism into the market. Under the interweaving of multiple variables, the US dollar index is at a critical crossroads. If Powell's speech in the early morning deviates from market expectations, it is expectedIt will cause severe price fluctuations.
Technical:
The US dollar index is currently located near 98.80, and the trend rebounded from the low point of 96.37, reaching a maximum of 99.14, but it encountered resistance and fell back when it approached the integer mark of 100.00, reflecting that there is significant selling pressure above this position.
From the K-line structure, the bulls' upward momentum is blocked, and there is pressure to take profits in the short term. However, the overall structure has not yet destroyed the rebound trend, and the price is still between the middle rail of the Bollinger band (97.72) and the upper rail (99.04). The Bollinger band remains slightly open, reflecting that it is currently in a strong oscillation pattern.
In terms of MACD indicators, the DIFF line continues to rise from below the zero axis, and the MACD bar chart has expanded since late July, indicating that the short-term momentum has turned from idle to long. However, the current MACD indicator is close to the previous high. If the evening event drive is less than expected, you need to be vigilant about the risk of short-term pullbacks.
The RSI indicator is located near 58.4 and has not yet entered the overbought area and still has further upward action potential, but it also implies that the bulls are facing a critical zone and the market urgently needs new catalysts to www.xmspot.complete the breakthrough of the 100 mark.
Technical structure analysis believes that 99.14 and integer digit 100.00 constitute the key resistance range above. If it can break through in large volume, it is expected to challenge 101.00 again; the lower support level is focused on 97.92 and Bollinger band lower track 96.38. Once it falls below the latter, it will constitute a phased trend reversal signal.
Previous observation of market sentiment:
The market is currently in a state of "silence before news", and risk preferences are significantly converging. Traders are generally unwilling to make heavy bets before the FOMC results are announced, reflecting a typical event-driven waiting market.
The fear and greed index has not shown obvious extremes, reflecting that the market has not yet formed a consistent expectation and strong wait-and-see sentiment for funds. The role of the US dollar as a global liquidity anchor makes it attractive against the current background of "interest rate expectations are uncertain + international uncertainty continues", so the US dollar's decline is limited.
But it is worth noting that if the Fed's attitude changes, coupled with the increase in pressure on it by the White House and the heating of international uncertainty, the US dollar's safe-haven position may be challenged, which will trigger a rapid turn in market sentiment.
The above content is all about "[XM Foreign Exchange Market Review]: Powell's speech becomes the key, and the direction of the US dollar is about to be announced". It was carefully www.xmspot.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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