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The dollar's technical outlook is "putting" to the hole, but its fundamentals are "digging holes"
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: The technical aspects of the US dollar are "pushing" to the hole, but the fundamentals are "digging holes"." Hope this helps you! The original content is as follows:
On Monday (November 03), the U.S. dollar index showed a mild rebound trend during the Asian and European trading hours, with spot prices fluctuating in a narrow range near key technical resistance levels. As of the time of writing, the U.S. dollar index was quoted at 99.8739, up slightly by 0.17% during the day, showing the market's cautious buying sentiment before waiting for further guidance. Although the technical side has short-term support, the fundamental side has been challenged by the uncertainty of the domestic economy and policy in the United States. This pattern of short-term differentiation between fundamentals and technical side has become the main feature of the current market.
Fundamentals: Consumption momentum faces test, policy uncertainty rises
American consumers have always been the backbone of the U.S. economic resilience, but the latest analysis shows that this resilience is facing severe tests, especially among low- and middle-income groups.
The chief economist of a well-known organization pointed out that the budgets of low-income families are under pressure due to rising medical costs, potential interruption of federal food assistance (SNAP), and uncertainty about the outlook for the job market. We are currently on the eve of the important Thanksgiving and Christmas shopping seasons, but the continued "shutdown" of the government not only cuts off the benefits of low-income people, but also interrupts the flow of key economic data, making it difficult for policymakers such as the Federal Reserve to assess the true state of the economy.
In addition, the agency's experts also mentioned the phenomenon of the "K-shaped economy", in which high-income households benefit from rising stock markets and strong consumption, while low-income groups face pressure, manifested by increased auto loan defaults and more budget-conscious consumption patterns. Federal Reserve Chairman Powell has also pointed out this "polarization" pattern.
Policy uncertainty also casts a shadow over the economic outlook. tariffRhetoric, a budget standoff over Affordable Care Act (ACA) subsidies, and a potential government shutdown could weigh on fourth-quarter growth by as much as a percentage point. Although some analysts expect that tax rebates early next year may bring some offsetting effects, in the short term, these "adverse policy shocks" will test the resilience of the U.S. economy and put pressure on the fundamental valuation of the U.S. dollar. This kind of worry creates a risk aversion sentiment in the market, but at the same time, it may also support the U.S. dollar in the short term due to its safe-haven properties, forming a xm-forex.complex intertwined impact.
Technical aspect: Bulls dominate the 60-minute chart, pay attention to the convergence of the Bollinger Bands
The current 60-minute trend chart of the US dollar index shows signs that short-term bulls have the upper hand, but momentum may face the risk of short-term depletion.
Technical analysis and deduction: The U.S. dollar index is quoted at 99.8739, clearly running above the 60-period simple moving average (60SMA: 99.5253). This fact establishes the technical tone of the short-term bullish bias. At the same time, the price also broke through the middle track of the Bollinger Bands (99.7820) and once touched the upper track (99.9090). This shows that during the intraday trading period, buyer power is concentrated to push the index upward.
Indicator analysis: The relative strength index (RSI14) reported 66.7323. Although it has not yet entered the overbought area (above 70), it is already in a strong range, reflecting sufficient short-term momentum. However, the index is close to the Bollinger Band upper track, and the distance between the upper track and the middle track is relatively limited, suggesting that the index may face the need for a slowdown in upward momentum or a correction in the short term.
MACD analysis: DIFF (0.0754) and DEA (0.0741) of the Moving Average Convergence and Divergence (MACD) are both running above the zero axis, and DIFF is slightly higher than DEA, and the MACD column (0.0024) is slightly enlarged. This is a mild bullish signal, indicating that the index’s short-term rebound trend can be maintained. However, the value of the histogram is small, showing that the bullish power is not strong enough and may turn at any time.
Trend derivation: Given that the price is close to the Bollinger Band upper track and the RSI is at a high level, the index may be consolidated at a high level near the upper track in the short term. If it can effectively break through the resistance near 99.91 and stand firm, it is expected to test the 100.00 integer mark. On the contrary, if it falls from the upper track and falls below the middle track of 99.7820, it may return to 60SMA 99.5253 for support.
Support and resistance range prediction: DXY
Based on the disk analysis of the US dollar index futures contract, we focus on the following key ranges:
Short-term resistance; 99.90-100.00; the strong resistance area xm-forex.composed of the upper Bollinger Band and the 100.00 psychological mark. During the session, we need to pay attention to the price's test of the upper track 99.91. If it fails to effectively break through, it may trigger short-term profit-making selling pressure.
Short-term support; 99.75-99.80; near the 60-minute Bollinger Bands middle track (99.7820), this area is short-termLine bulls are the key to maintaining their advantage. If it falls below here during the session, it indicates that the short-term upward trend has been frustrated.
Strong support; 99.50-99.55; the area where the 60-period SMA (99.5253) is located. This is a key watershed in the short-term trend. If you hold this position, the rebound pattern will still exist; if it fails, the short-term trend may turn downward.
Future trend outlook: Long and short interweaving, waiting for directional breakthrough
Based on the analysis of fundamentals and technical aspects, the U.S. dollar index faces a xm-forex.complex long and short intertwined situation in the short term.
From a technical point of view, although short-term bulls have the advantage, they have already touched the Bollinger Band upper limit, and there is a risk of exhaustion of kinetic energy. The index tends to perform range-bound consolidation at a high level. This consolidation is about giving fundamentals time to have an impact.
Looking ahead to the market outlook, the pressure on consumer spending in the fundamentals of the U.S. economy and policy uncertainty (such as government "shutdowns" and tariff remarks) pose potential risks to the dollar's mid- to long-term decline. However, in the absence of key economic data disclosures, market focus may shift to risk aversion, which may provide some support for the US dollar in the short term.
Therefore, the short-term trend of the U.S. dollar index will be repeated around the key technical range. The market needs to wait for the resolution of the U.S. government "shutdown" and the subsequent recovery of economic data to provide clearer direction guidance for the U.S. dollar index. Before that, the index is likely to seek a directional breakthrough in the range of 99.50 to 100.00.
The above content is all about "[XM Foreign Exchange Market Analysis]: The US dollar's technical aspects "push" to the hole, but its fundamentals are "digging holes"". It was carefully xm-forex.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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