The U.S. Dollar Index appears to be steadily rising, which could mean that the currency market is still experiencing relatively high demand for the U.S. currency.
The dollar as measured by its index rose above 93 points this morning, marking its highest level since July 21. What's more, the DXY appears to be aiming to overcome the peak at 93.19, and this could open the way to levels last seen in late March 2021. If the EUR/USD major currency pair crosses the potential support at 1.17, it could find itself at its lowest level since November 2020.
A clue in fund flow
The US dollar growth mindset seems to be displayed by leveraged funds, which in early August raised the number of net long positions on USD index contracts for the sixth consecutive week. Meanwhile, as recently as mid-June, the number of net long positions was minus 2303 contracts, and on August 3 it was already 18,881 contracts, the most since March 2020. - according to CFTC data and a COT report.
Today, investors are awaiting US inflation data. It is expected to remain above 5 percent. Today will also be the speech of Esther George, president of the Federal Reserve Bank of Kansas City. On Monday, Raphael Bostic and Eric Rosengren, Fed representatives, said that they believe monetary policy tightening will begin in Q4 2021. However, what may be more important for the market is what Jerome Powell, the head of the Fed, will say at the central bankers symposium on 26-28 August in Jackson Hole and what data from the US labour market will be released in early September.
USA: the biggest increase in infections since February
The United States is struggling with another wave of coronavirus. The number of new cases of the disease has remained above 100 thousand a day since the end of July. This marks the largest increase in infections since February 2021. Hence, the US could see a quick agreement on the $550 billion infrastructure program, the plan for which has already passed the Senate, sending the bill back to the House of Representatives, where its fate lies in the hands of Democrats.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.31% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
