Medium-term prospects for the US dollar for August-September

The dynamics of the US dollar, which is reflected by the weighted index of the US dollar against the basket of major currencies, expresses in fact the majority of the major currency pairs on the market traded in tandem with the US currency.

Therefore, using technical analysis of the dollar dynamics, it is first of all we need to pay attention to the dynamics of quotations of the US dollar index, which will allow us to see the prospects not only of the US dollar, but of the major currency pairs containing USD.

In this analysis of the dollar index, standard methods of technical analysis will be used, which will be available separately in the Trader’s Blog.

Starting from the middle of June, the US dollar index is traded in an upward triangle, limited to a significant resistance of 95.00-60. This level also acted as a strong resistance in September-November 2017. And zone 95.00-60 acts as a strong turning zone.

The US dollar index H4 chart

An upward triangle refers to growth figures indicating a continuation of the trend. Exit from this figure is often performed on an unpaired resistance test. As a rule, the third or fifth. Now the fourth resistance test is actually taking place.

Due to fundamental factors, namely the emerging risks associated with the investments of large European banks in the Turkish economy, this figure accelerated the development and the formation can be considered worked out. This indicates an acceleration of the uptrend on the dollar index, which is limited to levels of 96.50 and 97.00.

The US dollar index H4  chart with the spent upward triangle

On the daily timeframe, the dollar index remains in an upward trend, but is limited by overbought and resistance zone: 96.50 and 96.00. This is due to the recent increase in the increase in risks and optimism about the expectation of higher rates in the US.

At the same time, it is worth noting that correction is necessary for further dollar movement. And resistance levels: 96.50 and 97.00 for this are great, opening the way to support levels 95.60 and 95.00.

The US dollar index D1 chart

The main factor of risk and uncertainty in the US remains the monetary policy of the US Federal Reserve System, the rhetoric about which can both strengthen and nullify all expectations. This makes investors carefully monitor every statement of the US Federal Reserve.

Anton Hanzenko