{x} | Trading.live

Fundamentals

During the Asian session on Friday (June 9th), the USDX was slightly higher and is currently trading around 103.5. The market's enthusiasm for interest rate hikes was temporarily dampened by yesterday's release of an unexpectedly large increase in initial jobless claims, and expectations for next week's rate hike have weakened. Besides, the USDX fell sharply to a low of 103.2, gained support, and rebounded during today's session. The market is now expecting a suspension of interest rate hikes in June, recovering again in July by 25 basis points, but the data is contradictory. Last Friday, the Nonfarm Payrolls data was better than expected, with a significant increase in jobs, but at the same time, there was a climb in the unemployment rate to 3.7%. Moreover, the initial claims released yesterday verified the unemployment rate problem again, which put the market in a tangle, including rumors that the strong job market momentum is a false boom.

Besides, U.S. initial jobless claims were 261,000 in the week of June 3rd, higher than the expected value of 235,000 and the previous value of 232,000. The monthly final value of U.S. wholesale inventories in April was -0.1%, higher than the expected value and the previous value of -0.2%.

In general, there is a certain split in the current market employment data. The market needs more data and turns the target to the upcoming inflation data. For the USD bulls, the rate hike is one of the factors, while the other factor lies in the favorable complicating factor, that is, enormous U.S. government bonds are expected to be issued for the rest of the year, which will drive up U.S. bond yields and in turn pull up the USDX. For the USD bears, the current rate hike is ending, since now the USD is in a chaotic phase and turning from bullish to bearish, returning to a descending trend will be just a matter of time. In the past month, the USD's performance is outstanding, but risks are also growing because the mainstream of the foreign exchange market since this year has always been negative on USD. Thus, the USD may be able to maintain short-term strength in interest rate hike expectations and liquidity tightening, but the overhead space is limited.

Technical Analysis

Regarding the daily chart, the 5-day SMA crosses below the 10-day SMA. After the significant decline yesterday, the USDX is suppressed by the 5-day, 10-day, and 20-day SMAs, tremendously weakening the short-term momentum of Bulls. Furthermore, MACD shows a death cross, indicating a short-term bearish trend, with the initial resistance to be near the 5-day SMA (103.8) and initial support to be near 103.  

Today's trading plan: Go short after the rebound. For aggressive traders, try to go short at the 20-day SMA (103.6) with the stop-loss setting at 104. Meanwhile, the first target to take profit is at 103.2 while the second one is at 102.8.  

Trading Recommendations

Trading direction: Short

Entry price: 103.600

Target price: 102.600

Stop loss: 104.600

Support: 103.000/102.600

Resistance: 104.600/105.800