U.S. Dollar Continues To Drive Markets
NAGA | Sep 29, 2022 04:35AM ET
The US Dollar saw a hiccup in its six-day-long trend yesterday - a phenomenon also seen in the US stock market.
Over the past six days, the US Dollar increased in value from between 4% and 8%, depending on the currency pair. Of course, traders are aware that trends do not continue without retracements.
The stock market had declined earlier in the day, taking the price to a new low. However, the price movement was rejected, potentially due to the support level, which may have acted as a psychological level for traders.
As we approached the US session, the stock market gained momentum, with the S&P 500 seeing the strongest increase, followed by the Dow Jones. The S&P 500 ended the day 1.75% higher than the daily price open.
Gold, on the other hand, rallied by almost 2.90% within eight days due to the USD decline. However, this morning the price is seeing a clear attempt to correct back downwards.
h2 EUR/USD - Technical View/h2EUR/USD saw a very similar price movement to gold, indicating that the price is most likely driven by the USD rather than the Euro. The US Dollar is significantly lower this morning compared to previous days.
However, the US Dollar Index has increased by 0.85% this morning, reflected in the EUR/USD chart.
When looking at the price on a 4-hour chart, we can see the instrument has now approached the 15 Exponential Moving Averages , which have normally acted as a support/resistance point after the first price breakout.
Traders will consider this as well as if the asset sees moving averages crossover downwards, indicating further downward movement. Traders should keep in mind the support level at 0.9533.
Throughout the day, investors will mainly focus on speeches and interviews scheduled with members of the Federal Reserve. This afternoon FOMC member Mr. Bullard and Ms. Mester are expected to give a speech.
The speech will also be followed by questions, and the members will most likely comment on inflation, employment, and the Fed’s monetary policy.
Investors will also monitor the release of the US final Gross Domestic Product figure and Unemployment Claims.
h2 Crude Oil - Technical View/h2Over the past 24 hours, commodities have seen similar price conditions due to correlations with the US Dollar.
The oil had significantly increased during yesterday’s session but has now reached a resistance level and traders are keen to see how the asset will react at this level now the USD is rising again.
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The price of crude oil has been influenced by three major factors over the past 24 hours. Yesterday, two reports were released regarding inventories and supply. Crude oil inventories were reported at a neutral level of -0.2 million barrels.
It's lower than expected, which is positive for the price. However, the American Petroleum Institute reflected an increase in the index by over 4 million barrels, seriously exceeding the forecast of 333,000.
Nonetheless, the price increased despite the higher level of supply. This may have been a reaction to the latest hurricane in the Gulf of Mexico which led to a halt in oil production in certain regions.
Some reports have advised that this may lead to a decrease in supply by up to 190,000 barrels per day.
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