U.S. Dollar Bulls Remain ResilientPosted 11/15/2019 7:47AM CT |
U.S. dollar futures are 20 points lower Thursday afternoon, but the greenback is holding psychological support at the 98 level. America’s currency remains in an uptrend on the chart despite its recent correction, which adds fuel to the bull camp because it maintained support above the valid trendline and did not close beneath the 97-pivot point. The Fed’s announcement of liquidity injection is what set the correction path for the dollar, but that news is priced in at this point. Furthermore, Powell’s testimony this week hinted at a pause in the rate cut cycle (higher rates means a stronger domestic currency). The CME puts the odds of a December rate cut at just 3.7%. From a relative perspective, our rates are still higher than those of other developed economies, which attracts foreign investors to American assets thus keeping the demand for dollars strong. I believe any dips in the dollar will be short-lived, and the trend projects a test the 100 level in early January. Foreign currencies, namely the European currencies, will move to the downside should the dollar’s uptrend remain intact. The Japanese yen has found strength this week but will likely struggle to hold trade above 92.50. One thing has proven true time after time; demand for the US Dollar is not going anywhere anytime soon.