Bearish USD Risks As Traders Eye Fresh US/Iran Talks
Dollar Remains Weak
The US Dollar remains subdued as we head into the weekend with the DXY still treading water below the 98.24 level. Optimism over US/Iran peace talks ands the Israel/Lebanon ceasefire is helping keep oil prices anchored lower on Friday, with USD down as a result. Traders are cautiously optimistic that a broader peace agreement can be achieved in coming weeks, in line with signals from Trump. The US President has twice this week shared his view that he feels the war will soon come to an end and traders will now be watching for news of fresh peace talks to take place. Trump even joked that he himself would travel to Pakistan if it meant getting a deal done. Against this backdrop, USD looks vulnerable to a fresh push lower near-term particularly if talks start to progress well and headlines are positive.
US Stocks Soar
The rally in risk assets this week has seen capital moving out of USD as traders exit safe-haven plays and opt for riskier positions. US stocks have been on a tear with the S&P & the Nasdaq both breaking out to fresh all-time highs this week, reflecting the shift in sentiment which is driving markets. If we see positive headlines over the weekend regarding fresh peace talks, stocks could well push firmly higher next week, leading USD and crude prices lower again. Focus will then turn to a slew of incoming US data next week along with the confirmation hearing of incoming Fed president Kevin Warsh.
Technical Views
DXY
For now, DXY is caught between the underside of the 98.24 level and the retest of the broken bear channel highs. With momentum studies bearish, the outlook is skewed in favour of a deeper drop down towards the 96.63 level next which is a key support area for the Dollar. Topside, 99.15 is the level to break for bulls to regain some momentum and turns focus back to the 100 mark.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.