Trusted by over 15 Million Traders
The Most Awarded Broker
for a Reason
CATEGORIES
News
- 【XM Market Analysis】--GBP/USD Analysis: Forecast for 2025
- 【XM Market Analysis】--USD/CAD Forecast: USD Falls Against Loonie
- 【XM Market Analysis】--CAC Forecast: CAC Continues to Pressure the Upside – Can I
- 【XM Group】--NZD/USD Forecast: New Zealand Dollar Continues to Reach Higher Again
- 【XM Market Analysis】--USD/CAD Forecast: Pushes Higher Amid Dollar Strength
market analysis
In the game between short crowding and dot chart expectations, is the risk of the US dollar at the lower or upper edge?
Wonderful introduction:
Walk out of the thorns, there is a bright road covered with flowers; when you reach the top of the mountain, you will see the cloudy mountain scenery like green clouds. In this world, a star falls and cannot dim the starry sky, a flower withers and cannot desolate the whole spring.
Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: Short congestion and dot chart expectations game, is the risk of the US dollar at the lower or upper edge?". Hope it will be helpful to you! The original content is as follows:
On Monday (September 15), the US dollar index (DXY) continued to fluctuate narrowly before the market, repeating around the 97.40 line, and is still within the range (about 97.30-98.25) since the non-agricultural announcement on September 5. Since Jackson Hall's speech on August 22, DXY has been operating in a sloping downward channel as a whole. There is currently few short-term guidance. The key to this week is the August retail sales and industrial output announced on Tuesday, and the FOMC interest rate resolution on Wednesday. The futures market shows that the expectation of the Federal Reserve's interest rate cut this week has been fully included, with the mainstream consensus of 25 basis points, but a few institutions are also betting on 50 basis points, and the market needs to be wary of "accidents above the consensus."
Brands:
1) Interest rate expectations and macro rhythm: CME tools show that the Fed's interest rate cut this week has been fully priced, and the market's probability of continuing to relax this year remains high. The weak narrative of recent employment-related data is still fermenting - the initial unemployment claims unexpectedly climbed to a new high last week (of which Texas may have caused the data to be high), consolidating the logical chain of "employment slowdown - policy turn loosening". Meanwhile, some sellers (such as Morgan Stanley) expect to cut interest rates at every remaining meeting this year. FAC and Standard Chartered even proposed a "radical calibration" plan of 50bp this week, citing that the current "moderate restriction" has been extended for too long and may be "excessive".
2) Data Forecast: This week, focus on retail sales (market expectations + 0.3% month-on-month) and industrial output on Tuesday; if consumption is not weak and inflation maintains a decline, the pricing of "moderate interest rate cuts + soft landing" will continue; on the contrary, if consumption and production weaken simultaneously, the defensive buying of the US dollar may reappear after a short-term retracement..
3) Cross-asset constraints: the equity market is not volatile, the interest rate curve tends to shift downward, and the marginal support of the risk parity strategy for the US dollar is limited; if interest rate cuts lead to rapid improvement in financial conditions, the subsequent secondary boost to growth expectations may actually reduce the 2026 interest rate cut pricing in a longer period. Overall, short-term narratives are dovish, but long-term balanced or more neutral.
Technical:
Based on the daily chart, the current price is below 97.9808 of the Bollinger middle rail and above 97.3066 of the Bollinger lower rail, showing a weak consolidation structure of "above the lower rail - below the middle rail". The upper rail 98.6549 continues to move down from the high level, and the bandwidth convergence shows that the volatility is falling. As the early stage of "Bollinger Band Squeeze", the momentum selected in the subsequent direction will rely more on fundamental catalysis. In terms of MACD, DIFF is -0.1774, DEA is -0.1247, and the bar chart is -0.1055. The short-term kinetic energy is still below the zero axis but narrows. The action energy is decreasing under the prompt, and there is "weak passivation" in the short term. RSI (14) was 42.9043, in the neutral and weak range, neither oversold nor repaired to the strong range (>50). www.xm-forex.combined with the K-line structure, the entity is small and the upper shadow is repeated in the past two weeks, indicating that the upper selling pressure has not disappeared; but it has been supported many times in the 97.30-97.24 area, forming the "horizontal-dynamic" resonance support along the lower edge.
In terms of resistance and support distribution, the first resistance is around 98.00 (Ballinger's middle rail and the dense trading area in the past), and further resistance is between 98.25 (the upper edge of the range on September 5) and 98.65 (the upper edge of the Bollinger's upper rail); the first support is between 97.30 and 97.24. If it is lost, pay attention to the previous low backtest of 96.86; on the contrary, if the daily line effectively closes above 98.00, and the MACD column continues to shrink and the RSI crosses 50, it is expected to start the upward test of the 98.25-98.65 range. The overall pattern is still in "low fluctuation consolidation in the downward channel", and the short-term trend is more like a tug-of-war of "technical rebound and weak oscillation".
Preview of market sentiment:
The current structure of "dove expectations have been crowded at high levels, but the decline in growth has not been confirmed by the data" makes sentiment show the swing characteristics of "cautious and short":
Consensus side: The market has widely bet on a 25bp rate cut and expects to drop twice a year. The short position of the US dollar is not low, and it tends to "short positions" before the data or conference statements.
Reflexive end: If the rate cut this week is landed and the dot chart has a medium-term path slightly higher than market expectations, the US dollar may experience a "short cover after selling facts"; on the contrary, if the statement significantly downgrades the growth assessment and releases a stronger forward easing signal, the lower edge of the US dollar may be fragilely tested.
Future Outlook:
Short-term (this week-next week):
—Short scenario: If the resolution not only cut interest rates by 25bp, but also the statement/dot chart releases a stronger loose path, it may be more sensitive to employment downturn, and retail sales are lower than expected, the US dollar may test again 97.30-97.2In the 4th interval, the bottom break points to 96.86.
—Bolster scenario: If the resolution emphasizes "data dependence + non-preset path" while lowering interest rates, the downward revision of the dot matrix for medium-term interest rates is limited, and retail/output is not weak, the US dollar may www.xm-forex.complete the "upper edge breakthrough after extrusion" in the range of 97.40-98.00, and the upward measurement of 98.25 and 98.65; at this time, the RSI crosses 50 and the Bollinger mid-track upward will be the key confirmation.
Trader Observation Points: The FOMC statement's statement on the trade-offs between employment and inflation, the neutral interest rate path in the 2026, the structural details of retail sales (core, services, durable goods), and the skewness changes in the options market before and after the resolution.
The above content is all about "[XM Forex]: Short congestion and dot matrix chart expectation game, is the risk of the US dollar at the lower or upper edge?", which was carefully www.xm-forex.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
Life in the present, don’t waste your current life in missing the past or looking forward to the future.
Disclaimers: XM Group only provides execution services and access permissions for online trading platforms, and allows individuals to view and/or use the website or the content provided on the website, but has no intention of making any changes or extensions, nor will it change or extend its services and access permissions. All access and usage permissions will be subject to the following terms and conditions: (i) Terms and conditions; (ii) Risk warning; And (iii) a complete disclaimer. Please note that all information provided on the website is for general informational purposes only. In addition, the content of all XM online trading platforms does not constitute, and cannot be used for any unauthorized financial market trading invitations and/or invitations. Financial market transactions pose significant risks to your investment capital.
All materials published on online trading platforms are only intended for educational/informational purposes and do not include or should be considered for financial, investment tax, or trading related consulting and advice, or transaction price records, or any financial product or non invitation related trading offers or invitations.
All content provided by XM and third-party suppliers on this website, including opinions, news, research, analysis, prices, other information, and third-party website links, remains unchanged and is provided as general market commentary rather than investment advice. All materials published on online trading platforms are only for educational/informational purposes and do not include or should be considered as applicable to financial, investment tax, or trading related advice and recommendations, or transaction price records, or any financial product or non invitation related financial offers or invitations. Please ensure that you have read and fully understood the information on XM's non independent investment research tips and risk warnings. For more details, please click here