- The USD remains on the rear foot for the second consecutive day, although it lacks sale of follow -up.
- The technical configuration promotes lowering transactions and supports prospects for a new depreciation decision.
- A break -sustained under the SMA of 200 periods on H4 is necessary to reaffirm the negative perspectives.
The US dollar index (DXY), which follows the greenback against a basket of currencies, is negotiated with a negative bias for the second consecutive day on Friday, although the intra -day decline lacks lower. The index is currently negotiated around the region of 100.70, down just over 0.10% for the day, and manages to maintain above the simple mobile average of 200 periods (SMA) on the graph of 4 hours.
Meanwhile, the technical indicators dropped into time / daily cards support the prospects for possible ventilation below said support, currently armed near the 100.50 region. Subsequent autumn could make the DXY vulnerable to extend the demotion slide for this week of its highest level since April 10 and test the low weekly swing, around the psychological brand of 100.00 affected on Wednesday.
Some follow -up sales suggest that the recent resumption of the bottom of the year at the beginning of the beginning of April 21 followed its course and will open the way to deeper losses. The DXY could then fall on the intermediate support 99.60-99.55 en route to zone 99.20 and the brand at 99.00.
On the other hand, the immediate obstacle is fixed near the region 101.00-101.10, above which a new-combat of a short coverage movement could lift the Dxy to the region 101.70. American bulls (USD) could then make a new attempt to conquer the 102.00 bar. A strong force beyond the latter could cancel any short-term negative bias and pave the way for a significant movement of appreciation.
DXY 4 HOURS
US dollar FAQ
The US dollar (USD) is the official currency of the United States of America and the “de facto” currency of a large number of other countries where it is in circulation alongside local tickets. It is the most negotiated currency in the world, representing more than 88% of all global turnover, an average of 6.6 billions of dollars of transactions per day, according to data from 2022. After the Second World War, the USD took over from the British book as a global reserve currency. For most of its history, the US dollar was supported by gold, until the Bretton Woods agreement in 1971 when the Order stallion left.
The single most important factor on the value of the US dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to reach price stability (controlling inflation) and promoting full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices are increasing too quickly and inflation is greater than the 2% target of the Fed, the Fed will increase rates, which helps the USD value. When inflation falls below 2% or the unemployment rate is too high, the Fed can reduce interest rates, which weighs on the greenback.
In extreme situations, the federal reserve can also print more dollars and promulgate a quantitative relaxation (QE). QE is the process by which the Fed considerably increases the credit flow in a blocked financial system. This is a non -standard political measure used when credit has dried up because the banks will not lend themselves (by default of the fear of the counterpart). This is a last appeal when the simple drop in interest rates is unlikely to achieve the necessary result. It was Fed's weapon of choice to combat the credit crisis that occurred during the great financial crisis in 2008. It implies the Fed Print more dollars and use them to buy US state bonds mainly from financial institutions. QE usually leads to a lower US dollar.
The quantitative tightening (QT) is the opposite process by which the federal reserve ceases to buy obligations from financial institutions and does not reinvest the principal of the obligations it holds in new purchases. It is generally positive for the US dollar.
