DXY - 48hrs
Yesterday the ECB remained steadfast in its restrictive monetary policy and is not following the US Federal Reserve, which made it clear the day before yesterday that there would be no further interest rate withdrawals. But what both the foreign exchange market and the bond market, let alone the stock market, interpreted as the start of an impending cycle of interest rate cuts - and the price action was traded as it was traded. This approach is likely to be expensive, especially for my home country Germany and/or the Eurozone in general. Because most eurozone countries are still in stagflation (higher inflation rate YoY than GDP Annual Growth Rate YoY). Except Italy, if I'm not mistaken. Italy's economic policy experience of the last few decades - inflation of the euro area (liralization of the euro, as I always smugly like to say it) - probably comes into play here. Because if you look at the other euro countries, especially my homeland Germany, you could also come to the conclusion that the ECB is actually much more likely to lower interest rates than the US Federal Reserve, given such a weak economy in the euro zone. But Lagarde and Co did not give that impression. So here, in my home country of Germany, we may not be able to get out of the recession as quickly as previously assumed due to our liberal left green energy policy. However, the FED, on the other hand, is already experiencing the consequences of its statements today: raw materials have been rising massively since Wednesday evening (Central European time) - for example: palladium rose 10% yesterday (the biggest increase in almost four years). Which, sooner or later, more or less, can have an inflationary effect again. Just like the currently collapsing yields on government bonds - falling capital market interest rates make money cheaper and can therefore also be a renewed basis for impending inflation due to increased demand for credit. Which I'm not assuming today. But it cannot be ruled out either. As history from the 1970s proves to us.
3 complementary articles worth reading
DXY - Another 48 Hrs.
The historic low was traded in March 2008 at 70,698 points.
Looking back shortly before the outbreak of the financial crisis in 2008, after the Lehman Brothers Bank disaster. The previous interim high, in a historical context, was 92,630 points. Which were last traded in November 2005. And those 92,630 points are really, i mean really really, important in two ways. At least in my humble opinion, in the historical context when you focus on price action. Because they are more or less something like an average value of the historical low of 70,698 points (March 2008) and/or the last high of 114,778 points (September 2022). Because, if the DXY were to trade below 92,630 points again, we would have to describe the price action in the DXY again in terms of a bear market. But that has no longer been the case since January 2015. Which is why since then - even since January 2015 and with price action above 92,630 - we can speak of a historical trend reversal formation in the DXY.
However, in relation to the current price action, in the historical context (monthly candlestick charts) in relation to daily business, this is far away today. Thats why we should include the intermediate high (b) and intermediate low (B) in our considerations today. Because both the interim high, at 103,820 points (January 2017) and the interim low, at 88,253 points (February 2018), retrospectively confirmed the bullish trend reversal formation breakout at over 92,630 points - at least until today. Which is why we are paying the most attention to our daily business, the 103,820 points. Because the 103,820 points are, for better or worse, the closest to the current 102,511 points. And/or the 99,578 points are also important. Because this is the currently last traded low in July 2023 since the last high of 144,778 points (September 2022). The 102,992 points and/or 94,650 points are a special story. Because both are high and/or low from March 2020 - Coronavirus outbreak. Like the 116,080 points and/or 111,310 points. Because both the high and/or low from September 2001 - when the two Twin Towers in New York imploded in public. But more on that tomorrow - in the medium-term weekly candlestick charts...
I am currently assuming that the US dollar will continue to fall - towards 99,578. And/Or a little deeper.
In the worst and/or best case scenario down to 94,650 points, next year 2024. And that for two main reasons. On the one hand, due to the FED's current and/or upcoming monetary policy. And the other reason - the cause of the FED monetary policy - because 2024 is a presidential year in the USA. And because we don't know today who will be US President in 2025, we are likely to trade a volatile DXY in 2024. And that tends to be cheaper rather than more expensive. What I will try to comment on briefly and/or succinctly every day from today onwards.
may the price action be with you:
aaron
Yesterday the ECB remained steadfast in its restrictive monetary policy and is not following the US Federal Reserve, which made it clear the day before yesterday that there would be no further interest rate withdrawals. But what both the foreign exchange market and the bond market, let alone the stock market, interpreted as the start of an impending cycle of interest rate cuts - and the price action was traded as it was traded. This approach is likely to be expensive, especially for my home country Germany and/or the Eurozone in general. Because most eurozone countries are still in stagflation (higher inflation rate YoY than GDP Annual Growth Rate YoY). Except Italy, if I'm not mistaken. Italy's economic policy experience of the last few decades - inflation of the euro area (liralization of the euro, as I always smugly like to say it) - probably comes into play here. Because if you look at the other euro countries, especially my homeland Germany, you could also come to the conclusion that the ECB is actually much more likely to lower interest rates than the US Federal Reserve, given such a weak economy in the euro zone. But Lagarde and Co did not give that impression. So here, in my home country of Germany, we may not be able to get out of the recession as quickly as previously assumed due to our liberal left green energy policy. However, the FED, on the other hand, is already experiencing the consequences of its statements today: raw materials have been rising massively since Wednesday evening (Central European time) - for example: palladium rose 10% yesterday (the biggest increase in almost four years). Which, sooner or later, more or less, can have an inflationary effect again. Just like the currently collapsing yields on government bonds - falling capital market interest rates make money cheaper and can therefore also be a renewed basis for impending inflation due to increased demand for credit. Which I'm not assuming today. But it cannot be ruled out either. As history from the 1970s proves to us.
3 complementary articles worth reading
- New York Time from 2023/12/07 - Paul Krugman: "The Progressive Case for Bidenomics"
- Business Insider from 2023/12/13 - Jennifer Sor: "Dollarization won't be the 'magical' solution to Argentina's roaring inflation problem, Nobel economist Paul Krugman says"
- Foundation for Economic Education from 2023/12/15 - Jon Miltimore: "What Nixon's Ghost Can Teach Americans about Using Price Controls to Curb Inflation"
DXY - Another 48 Hrs.
The historic low was traded in March 2008 at 70,698 points.
Looking back shortly before the outbreak of the financial crisis in 2008, after the Lehman Brothers Bank disaster. The previous interim high, in a historical context, was 92,630 points. Which were last traded in November 2005. And those 92,630 points are really, i mean really really, important in two ways. At least in my humble opinion, in the historical context when you focus on price action. Because they are more or less something like an average value of the historical low of 70,698 points (March 2008) and/or the last high of 114,778 points (September 2022). Because, if the DXY were to trade below 92,630 points again, we would have to describe the price action in the DXY again in terms of a bear market. But that has no longer been the case since January 2015. Which is why since then - even since January 2015 and with price action above 92,630 - we can speak of a historical trend reversal formation in the DXY.
However, in relation to the current price action, in the historical context (monthly candlestick charts) in relation to daily business, this is far away today. Thats why we should include the intermediate high (b) and intermediate low (B) in our considerations today. Because both the interim high, at 103,820 points (January 2017) and the interim low, at 88,253 points (February 2018), retrospectively confirmed the bullish trend reversal formation breakout at over 92,630 points - at least until today. Which is why we are paying the most attention to our daily business, the 103,820 points. Because the 103,820 points are, for better or worse, the closest to the current 102,511 points. And/or the 99,578 points are also important. Because this is the currently last traded low in July 2023 since the last high of 144,778 points (September 2022). The 102,992 points and/or 94,650 points are a special story. Because both are high and/or low from March 2020 - Coronavirus outbreak. Like the 116,080 points and/or 111,310 points. Because both the high and/or low from September 2001 - when the two Twin Towers in New York imploded in public. But more on that tomorrow - in the medium-term weekly candlestick charts...
- 114,778 points: c) Intermediate high from September 2022
- 103,820 points: b) Interim high from January 2017
- 102,992 points: High during Corona Virus outbreak
- 102,514 points: current price
- 99,578 points: C) interim low from July 2023
- 94,650 Low during Corona Virus outbreak
- 92,630 a) Intermediate high from November 2005
- 88,253 B) Intermediate low from February 2018
- 70,698 A) Interim low from March 2008 - also a historic low
I am currently assuming that the US dollar will continue to fall - towards 99,578. And/Or a little deeper.
In the worst and/or best case scenario down to 94,650 points, next year 2024. And that for two main reasons. On the one hand, due to the FED's current and/or upcoming monetary policy. And the other reason - the cause of the FED monetary policy - because 2024 is a presidential year in the USA. And because we don't know today who will be US President in 2025, we are likely to trade a volatile DXY in 2024. And that tends to be cheaper rather than more expensive. What I will try to comment on briefly and/or succinctly every day from today onwards.
may the price action be with you:
aaron
