Weekly outlook DXY: Coronavirus outbreak
The price finish the last week with a shooting star signal, with an strong engulfing canddle structure in the daily chart, but the previous upside momentum is full of new support zones, lets see what can happen:
In the fundamental side:
Last friday manufacturing report on US was the catalyst for the strong downside movement, but previous to that news the price was keeping pushing higher, indeed because the coronavirus outbreak, the virus is spreading in a faster way than the SARS did, and with the new cases in Italy, South Korea and Iran (in this country there is not recovered report yet, just deads) there are pressures to more movement to the upside in the index. At the same line the negatives rates in the Euro Zone and in Japan, are making pressures for the investor to move to where there are positive yields, such as United State and emergency economies, so in the fundamental way there are chance to the price keep moving higher. In the other hand the next week is going to be the forth quartes US earning growth report, which one is expected to be just 3.2%, its depend if the coronavirus outbreak is gonna hurt this reports, if it does, there are going to increase chance for the federal reserve hike interest rate this year, as we can see in the CME Fedwatch tool, which one expect from the market one increase at june and the next one in november, so this could be the counterpart of the balance, to put the price of the dollar index to the floor.
In the technical side:
The price finish the last week with a shooting star signal, with an strong engulfing canddle structure in the daily chart, but the previous upside momentum is full of new support zones as we can see in the rectangle area called "supports area", but in the other hand, we can see that price is almost reaching the upper part of the channel, and it is also de fibonacci resistance level of 0.764 of the weekly sharply mvoement to the downside formed at 2018, giving so a strong resistance area for the price be evaluated by the bulls and the bears.
In the fundamental side:
Last friday manufacturing report on US was the catalyst for the strong downside movement, but previous to that news the price was keeping pushing higher, indeed because the coronavirus outbreak, the virus is spreading in a faster way than the SARS did, and with the new cases in Italy, South Korea and Iran (in this country there is not recovered report yet, just deads) there are pressures to more movement to the upside in the index. At the same line the negatives rates in the Euro Zone and in Japan, are making pressures for the investor to move to where there are positive yields, such as United State and emergency economies, so in the fundamental way there are chance to the price keep moving higher. In the other hand the next week is going to be the forth quartes US earning growth report, which one is expected to be just 3.2%, its depend if the coronavirus outbreak is gonna hurt this reports, if it does, there are going to increase chance for the federal reserve hike interest rate this year, as we can see in the CME Fedwatch tool, which one expect from the market one increase at june and the next one in november, so this could be the counterpart of the balance, to put the price of the dollar index to the floor.
In the technical side:
The price finish the last week with a shooting star signal, with an strong engulfing canddle structure in the daily chart, but the previous upside momentum is full of new support zones as we can see in the rectangle area called "supports area", but in the other hand, we can see that price is almost reaching the upper part of the channel, and it is also de fibonacci resistance level of 0.764 of the weekly sharply mvoement to the downside formed at 2018, giving so a strong resistance area for the price be evaluated by the bulls and the bears.
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