Fundamental Analysis: Demand for Cash/US dollars. Short-term moves in the US dollar are driven by changes in US systemic liquidity flows. When looking at the US exchange rate, the factor which determines its movement are long term yields. Long Term yields are effected by changes in systemic liquidity. Changes in systemic liquidity can be observed by looking at Shorter duration treasury bills/notes. The 02Year yield fell to new lows. The Eurodollar benchmark rate is also at record lows. Many money market rates are low. The system is flooded with cash. Pending debt ceiling discussion, requires the cash holdings of TGA to be reduced to a little less than $120 bln from over $1 trillion. This money will go to buy bonds. US 2-year premium over Germany has fallen 80 bp. While, the US 10-year premium over Germany is up to 1.61%. In short, US T-bill yields may dip below zero. Even if the Ten Year Yield drops the dollar can still rally because it is high quality and a better yield can not found elsewhere unless quality is sacrificed. Rates are not rising due to Increasing levels of Eurodollar positioning as foreign banks push reserves into U.S. Treasuries for "safety" and "yield." With the number of bonds with "negative yields" rising globally, the U.S. Treasury bond's positive yield and liquidity will likely keep it a preference for storage of reserves for now.
Powells Speech Yesterday confirmed that they will continue to buy 120 Billion in Large Scale Asset Purchases and maintain an accommodative Monetary Policy. The only thing that I can agree with Powell is the distinction he places on "actual" inflation vs. "inflation expectations". "inflation expectations" are caused by speculators looking to front run inflation.
There is a huge short interest on the US dollar, when it becomes apparent that DXY has bottomed, shorts will start to get unwound. WSB wya??, this is your next short-squeeze, pump DXY!!! The number of future contracts that are net short are at all time highs since 1990.
Technical Analysis:
1. Inverted Widening Triangle (Bullish)
2. Inverted H&S
3. Retest of falling wedge breakout
4. Near 0.5 retracement level of January Low to Feb High
5. RSI Oversold on 4hr
6. Formed Support around 90
7. Lower Area of Bollinger Band
Powells Speech Yesterday confirmed that they will continue to buy 120 Billion in Large Scale Asset Purchases and maintain an accommodative Monetary Policy. The only thing that I can agree with Powell is the distinction he places on "actual" inflation vs. "inflation expectations". "inflation expectations" are caused by speculators looking to front run inflation.
There is a huge short interest on the US dollar, when it becomes apparent that DXY has bottomed, shorts will start to get unwound. WSB wya??, this is your next short-squeeze, pump DXY!!! The number of future contracts that are net short are at all time highs since 1990.
Technical Analysis:
1. Inverted Widening Triangle (Bullish)
2. Inverted H&S
3. Retest of falling wedge breakout
4. Near 0.5 retracement level of January Low to Feb High
5. RSI Oversold on 4hr
6. Formed Support around 90
7. Lower Area of Bollinger Band
Комментарий:
DXY is breaking out of a huge falling wedge
