US dollar soars in forex, stocks retreat

US dollar soars in forex as stocks retreat

The US dollar has reached or is approaching new annual forex highs against many currencies. With the stock market sell off today, the US dollar index (DXY) is also on the rise.

On the 4-hour chart, the US dollar index (DXY) broke out of a continuation triangle on Monday and leaned against the resistance of the long-term ascending triangle’s upper trendline. On Tuesday, the DXY index closed above that trendline and could hit new highs for the year at 96.94. The only level hampered is the horizontal resistance at 96.65. Above highs, the DXY may hit the longer term double dip target near 97.75 (see vertical blue line to the left of DXY chart below). Note that there is a confluence of resistance at 97.73 / 97.82 comprising the 61.8% Fibonacci retracement level from the March 2020 highs to the January 6 lows, as well as the Fibonacci extension at 161.8% of the highs from November 24th to lows from November 30th. Support is at the top of the descending triangle trendline near 96.38, the 50 day moving average at 96.24 and the upward triangle trendline near 96.10.

4-hour US dollar (DXY) index chart

Source: Tradingview, Stone X

With the Bank of Canada meeting on the sidelines, there is only the US dollar side of the equation to worry about this week, such as the Fed meetings on Wednesday. The rise in the DXY index also helped push up the USD / CAD forex pair. The pair closed at its highest level in 2021 on Tuesday, near 1.2855 and erupted from a Cup-and-Handle formation. Three horizontal levels are above previous highs of 1.2990, 2021 highs at 1.2949 and long term horizontal resistance at 1.2990. Horizontal support and 50 day moving average are near 1.2740, then December 8th lows and horizontal support are near 1.2600 / 1.2610.

USD / CAD 4 hour chart

usd/cad forex bourse dollar
Source: Tradingview, Stone X

Interestingly enough, the RBNZ is not meeting this week either. (RBNZ, BOC and RBA are the only major central banks not to meet this week). The US dollar hit new annual forex highs against the New Zealand dollar on Wednesday as NZD / USD hit new annual lows at 0.6735. The pair has plenty of room to fall from here on the daily period as the next support level is not until the 50% retracement level from the March 2020 lows to the February 25 highs at 0.6531. . (As of this writing, the NZD / USD pair is a few pips below the 38.2% Fibonacci retracement level, which is 0.6749.) If the US dollar sells on the forex, then the NZD / USD pair could rise. Horizontal resistance is at 0.6860 followed by a confluence of additional horizontal resistance and the 50 day moving average at 0.6985. The 200-day moving average is at 0.7052.

Daily NZD / USD Chart

forex nzd/usd bourse
Source: Tradingview, Stone X

As inflation rises in the United States, the US dollar has hit new forex highs in 2021 and new closing highs in 2021, against some currencies. In others, the US dollar is near 2021 highs. That strength could change depending on what the Fed does on Wednesday. However, use the levels mentioned as a guide as to where the price may pause if there is a significant move in either direction.

By Joe Perry, » Official site

The Week Ahead in Forex October 2-7, 2022

Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or a solicitation to buy or sell forex foreign exchange contracts or CFDs. Although the information contained in this document has been taken from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect or consequential damages that may result from the fact that someone relies on such information.

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