31/10/2022 - EURUSD weekly analysis.
We’ve broken the upper downtrend line and are retesting as support, waiting for confirmation to see where we’re headed.
DXY has also broken uptrend and is retesting, the mirroring to EURUSD showing that strength in the dollar has been the main factor for the trend.
EURUSD may continue to go downwards and this may be a move to shake out obvious shorts.
The decider: Is the dollar weakening?
ECB have been slow with rate hikes but have 75bp on Wednesday with talk of maybe lower hikes in the future.
The ECB are in a hard place right now, risk a recession by introducing higher rate hikes or allow inflation to go on longer.
We’ve also seen positive GDP for Germany on Friday that may have subdued recession fears.
The FED are expected to hike rates on Wednesday by 75bp but must be noted that they’re expected to deliver 50bp in December and 25bp in January.
S&P500 is up around 2% and might be showing that the markets are optimistic and may show a weaker dollar.
NFP is expected lower which would coincide with FED moderation and push the dollar lower.
All in all we may be looking at a turning point, and it may depend on the test of the upper downtrend line.
If we bounce… it’s on, I expect volatility and we may see volatility that we haven’t seen since 2008.
If we drop, we’re still following the channel.
Are we seeing the dollar getting weaker?