Home Sports The US dollar collapsed amid ECB and Fed rate hikes amid technical...

The US dollar collapsed amid ECB and Fed rate hikes amid technical flaws


USD, DXY, ECB, Fed, Crude Oil, EUR/USD, GBP/USD, USD/JPY – Talking Points

  • The US dollar was buried by hopes for a less hawkish Fed
  • The ECB is ready to raise rates again EUR/USD holds the height
  • Treasury yields are lower. If the Fed doesn’t turn around, will the DXY rebound?

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The US dollar fell sharply overnight as the market appears to be looking for a less hawkish Federal Reserve ahead of next week Federal Open Market Committee (FOMC) meeting.

Futures and swaps markets are pricing in 75 basis points for next Wednesday’s Fed meeting and 50 bps for the Fed meeting next Wednesday. at the December meeting.

Some experts are concerned about a peak in rates next year, and for now that peak is estimated to be in the second quarter. Treasury yields edged lower across the curve and the benchmark 10-year note fell below 4%.

On the eve of this, the European Central Bank (ECB) is ready to raise rates by 75 bps, according to market prices and economists’ forecasts. euro/USD has so far held profits thanks to the Asian trade, as has most pairs against the US dollar.

Even USD/JPY is easing, trading as low as 146 after an eventful start to the week that likely led to a BOJ sell-off on Monday.

GBP/USD is trading back to levels last seen in mid-September as the mini-budget fiasco appears to be well and truly in the rear-view mirror.

The Bank of Canada (BoC) raised the overnight lending rate by 50 bps, less than the forecast of 75 bps. USD/CAD initially soared higher in the news, but then ended up back where it started.

Meta and Samsung posted results that missed targets, adding to the negative sentiment in tech names after Apple, Microsoft and Alphabet, which also disappointed expectations in the past few days.

The Nasdaq The 100 lost 2.04% in the cash session, but futures point to a firmer start later today, along with other major indexes Wall Street. Tech stocks can look vulnerable in a rising interest rate environment like the one currently unfolding.

APAC horse risks were relatively low, with the exception of Hong Kong’s Hang Seng Index (HSI). It managed to climb 2% today, recovering some of the heavy losses seen earlier in the week.

The Biden administration has revised its plan to restrict the Russian oil price, but the finer details aren’t completely ironed out yet. The WTI futures contract is around US$88 per barrel at press time, while the Brent contract is around US$96 per barrel.

After the ECB rate decision, the US will see data on GDP, durable goods and jobs.

The full economic calendar can be viewed here.

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How to trade EUR/USD


The DXY index is a US dollar index weighted against the euro (57.6%). JPY (13.6%), GBP (11.9%), CAD (9.1%), Swedish kroner (4.2%) and CHF (3.6%).

The DXY collapsed this week after breaking below the nearest uptrend line. In the bigger picture, it remains within the uptrend channel.

Support may be at the next uptrend line, which coincides with the 100-day simple moving average (SMA) it is currently around 108.40.

On the upside, resistance could be at breakout points of 110.06, 111.47 and 111.77.

The chart is created in TradingView

— Posted by Daniel McCarthy, DailyFX.com Strategist

Please contact Daniel via @DanMcCathyFX on Twitter


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