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Fundamentals

During the Asian session on Wednesday (June 15), the U.S. Dollar Index oscillated narrowly to the upside and is currently trading around 102.5. It is now the fourth day of a weak rebound for the dollar index, which has rallied from a low of 102 to 102.5, benefitting from the exceedingly expected real estate data. In fact, the logic of the dollar is now also very simple, which is basically obvious for a rate hike. The rate hike probability in July has risen to over 70%. The Fed skipped the rate hike in June, but it did not forget to threaten the market, making statements such as two more rate hikes within this year and maintaining high-interest rates for 2 years, all of which are building expectations of a strong dollar. The market does not seem to buy much, instead paying more attention to employment and economic data, which also shows that the market has been gradually returning to the most basic things about the dollar. In the economic fundamentals, it depends on whether there will be a recession in the U.S. on one side and on the other side on which country in Europe and the U.S. will have a recession first. This is because the impact of the monetary policy of the EU on the dollar index is the largest, followed by the yen and the pound. In the short term, the upside and downside of the dollar are both relatively limited. Focus on Fed Chairman Powell's congressional testimony tonight to see if there are clues that lean toward further rate hikes. The current market expectation is hawkish, and one could keep an eye on the trend generated by the expected difference.

Data: New housing starts totaled 1.631 million at an annualized rate in May, a record high since April 2022, compared to 1.4 million expected and revised to 1.34 million previously; building permits reached 1.491 million, compared to 1.423 million expected and revised to 1.147 million previously.

Investors need to pay attention to tonight's Fed Chairman Powell's congressional testimony at 10:00 pm, speeches by Chicago Fed President Austan Goolsbee, Cleveland Fed President Loretta Mester, and UK CPI data for May.

Technical Analysis

From the daily chart, the MACD continues the death cross and is expanding, and the MAs are diverging downward and side in line; the trend is still bearish. Last week the price fell below the important support position of 102.3, stabilized at the integer mark of 102, and rebounded slightly. Although the 4-day rise is more coherent, technically this may be more of a rebound after a sharp decline rather than a reversal. The dollar index is currently barely above its 5-day MA, while it is being suppressed by the 10- and 20-day MAs. If it cannot quickly recover the 10-day SMA at 102.9, the price will still be weak, and the direction of least resistance is still to the downside.

Intraday trading plan: there are not too many clues in the near future, and fundamental data is in a vacuum. It is recommended to mainly do short-term trading in a short period. For tonight, focus on the Fed's congressional testimony. If the testimony appears hawkish, you can wait for the price to be weak after surging higher and then go short; if not, you can directly follow the trend to do short selling, with the stop loss at the 20-day MA at 103.5 and the take profit at 101.8.

Trading Recommendations

Trading direction: Short

Entry price: 102.900

Target price: 101.800

Stop loss: 103.500

Support: 102.000\101.500

Resistance: 102.900\103.500