Dollar Seeing Fresh Safe-Haven Demand
Dollar Higher on Tuesday
The US Dollar remains in the green today following a reversal higher off the week’s lows yesterday. Fresh uncertainty over the health of the US/Iran ceasefire is fuelling renewed safe-have demand for DXY here. News that Iran attacked US ships in the Strait, followed by US retaliation against Iranian fast boats has once again thrown the peace process into question. With fears that the ceasefire will collapse, USD looks vulnerable to continued upside near-term with safe-haven buying likely to continue for now. The only limiting factor currently is the move lower we’ve seen in crude today. If oil prices can avoid a fresh spike, this could see USD staying anchored towards the lower end of last week’s range. However, if crude prices start to climb again, USD should see a firmer bid near-term.
US Data Due
Looking ahead today, focus will also be on incoming US data with the ISM services PMI due alongside the JOLTS jobs number and new home sales. Any strength in today’s readings should help feed into USD demand with traders turning increasingly hawkish on the Fed following the hawkish voting developments we saw at the last FOMC. Voting shifted to 8-4 in favour of a hold, with 3 members voting to shift away from an easing bias. With the Fed now the most divided it’s been since 1992, risks of a further hawkish skew should keep USD underpinned near-term, particularly while the US/Iran war drags on.
Technical Views
DXY
For now, DXY remains within the descending wedge patter framed by the broken bear channel highs and the bear trend line from YTD highs. While above the broken channel, focus is on a fresh push higher with bulls needing to clear 9915 to regain momentum and put focus back on a test of 100.36 next. If we break lower here, 96.63 is the next big support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.