Dollar Soaring or Plunging? A Must-Take Course for Traders

The US dollar index is like a thermometer, telling us the heat and influence of the US dollar in the global market. In June 2024, the US dollar index experienced a noticeable decline, slipping around 0.1% in early London trading. This marks the first significant pullback of the US dollar since August 2023.

What factors exactly led to this change in the trend of the US dollar index? How will the US dollar index evolve in the future? How should investors respond to and trade in such market changes?

This video episode will serve as an introduction, helping investors understand the background and causes of the US dollar index's decline. Combining the current market environment, it will also provide investors with specific operational suggestions and investment strategies, to better grasp the future direction of the US dollar index.

Creators：Daniel Ang

Subtitle

Today is Thursday, June 6, 2024, and today I'm going to talk a little bit about the dollar index, specifically about the dollar index traded in ICE Singapore. Now ICE Singapore refers to intercontinental Exchange, based out in Singapore, and the product is the dollar index futures.

Now let's get into the content itself, and of course, before we go into the chart, let me give you an overview of where the market, or rather what is moving the markets of late. The dollar index was down about 0.1% in early London trading this afternoon, hovering near a two month slow. Now, this is very much in line with the benchmark US ten years treasury yield, which is incidentally also trading near the two month slow. Now, sentiment is a little bit soft right now following last night's weak ADP job reports, which suggests that the us private employers are hiring less. And this is actually four months low as far as May is concerned.

Now, this is actually giving rise to the idea that the us job market is actually cooling. Analysts are also looking forward to possible rate cuts by the Federal Reserve in the second half of this year in the face of an obvious slowdown in the us economy following the downward revision of the Q1 GDP estimates last week. Analysts are also betting that the Federal Reserve will cut interest rates in September and perhaps one more time later in the year year, according to the latest poll conducted by Reuters.

Now, incidentally, last night with the bank of Canada, the BoC cut rates by 25 basis points to 4.75% and making it the third major central bank to actually cut rates this year, following the Swiss National bank and the Sweden National bank earlier on. Now, tonight, we are also expecting the European Central bank, the ECB, to also cut rates by 25 basis points. So we can see these are the drivers that is possibly moving the currency markets in, particularly the dollar.

So, based on the chart here, I'm showing you here in front of you, the monthly timeframe for the dollar index. This is referring to the cash index. You can see that generally speaking, we can see that the dollar is actually very firm based on the dominant trend, because the bigger boxes you can see are green. There are two green boxes here showing us that the dominant trend is actually bullish. And of course. based on that. we also see that there is also a counter trend that is also developina from a high of 114.78. And we have a dominant trend that's up. And a counter trend is suggesting that near term we could be seeing some more weakness in the dollar. But by and large, the dollar is bullish.

Okay, just to give you the background and this is the weekly timeframe. This is referring to the mini dollar index futures traded on ice singapore. And in this particular timeframe you can see that the sentiment is actually favoring the downside. The dominant trend is actually down 114.61 is the high. We can see that from here. The market is doing a series of downward movements suggesting that we may possibly see further losses in the dollar. Then of course in the particular timeframe.We also say there's a counter trend in place once the market breaks below 99.26. Then of course we have to eliminate this counter trend rally here and keeping the dominant trend intact suggesting that prices do favor the downside more than the upside as far as the weekly timeframe is concerned.

Now let's take a look at the daily timeframe. The daily timeframe is obviously very bearish right now because the bigger box is actually in pink with three boxes suggesting that the counter trend has started from as low as 100.43 .... Watch the full video to learn more.

Risk Disclosure and Disclaimer:

1. All content in this video, including but not limited to opinions, insights, and data, is provided by third-party authors and is for reference only. Direct International Financial Services Limited and its affiliates ("DA Group") do not assume any responsibility for the content of this video. Although the content in this video is obtained from information believed to be accurate, DA Group does not make any representation or endorsement as to its accuracy, completeness, quality, timeliness, or reliability, and expressly disclaims any responsibility for any information contained in this video. DA Group shall not bear any legal liability or liability for losses caused by all or part of the content. The videos reflect the personal opinions and views of the relevant authors and do not represent the position of DA Group.

2. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. Past results are not indicative of future results or performance.

3. All information provided in this video is for reference only and does not constitute an offer, invitation, suggestion, or solicitation for any action based on it.

4. The information is meant purely for informational purposes and should not be relied upon as financial advice.

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