US Dollar Price Analysis – A Weaker USD Allows Risk Markets Room to Edge Higher

US Dollar (DXY) Price Analysis and Charts.

  • US dollar weakness continues after Friday’s big post-NFP sell-off.
  • The US dollar is approaching a significant support zone.

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The US dollar edged lower earlier in the week, extending Friday’s sell-off, as risk markets edged higher despite the lack of any confirmed positive drivers. Equity markets moved higher, the VIX moved lower, while gold tested significant resistance despite high US Treasury yields. The 2-year UST is quoted at around 4.68%, while the 10-year is seen at 4.14%. All this risk appetite despite the Fed raising rates another 75 basis points last Wednesday and warning that markets may not fully price in the central bank’s desire to rein in inflation.

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The US Jobs Report (NFP) on Friday was seen as a mixed bag with more jobs created than expected while the unemployment rate rose slightly more than forecast.


October Jobs Report: Economy Added 261,000 Paychecks. Where Next for the US Dollar

One ongoing story being argued behind the increased risk is the potential lifting of covid restrictions in China. The story started about a week ago, sending Asian stock markets soaring, but it has been repeatedly denied by the Chinese government. Using China-based rumors as an excuse to take risks is not a good idea.

On Thursday, the latest outlook on US inflation should give the market a clearer short-term direction, although this may be overshadowed by a group of Fed speakers this week, starting with Collins, Mester, and Barkin today.

For all market-moving data releases and economic events see real-time DailyFX Calendar.

The daily USD chart highlighted Friday’s sell-off and the soft drift lower seen since the September 28 high print. The USD is now approaching the support zone between 109.30 and 110.30 which has made several attempts to break lower. The break confirmed below here paves the way to sub-108. The dollar is currently below both its 20- and 50-day moving averages, a neutral to negative set-up.

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US Dollar Currency Index Daily Price Chart – November 7, 2022


What are your views on US dollars – up or down?? You can let us know via the form at the end of this section or you can contact the author via Twitter @nickcawley1.


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