US Dollar set to decline
|The US dollar lost ground against the majority of its rivals as the market mood shifted to a bearish mode. China announced new measures to relax coronavirus restrictions, moving away from the “zero-Covid” policy, while Russia’s president warned that the threat of nuclear war is growing and that nuclear weapons may be used to defend itself. Tensions about global economic growth, as well as uncertainty about the US Federal Reserve’s monetary policy decision, have influenced the US treasury yield. Market participants have begun to put pressure on the US dollar, believing that the Federal Open Market Committee (FOMC) will pause policy tightening moves beginning next year after reaching the neutral rate. The US dollar may recover slightly in the short term before continuing its decline in 2023.
Interpretation for US Dollar decline
The monthly chart, which has been followed for the last 2 years, has played very well, and price is still trading within the expected zones. The expected target for the US dollar index has been met at the upper channel line of the blue channel. An alert was delivered to premium members regarding a significant drop in the US dollar. The index is now trading lower levels as per expectations.
A weekly chart validated the reason for outlining the alert for a significant drop, as the price hits the symmetrical broadening wedge formations at higher levels. Other technical indicators proved to be overbought in the short and medium terms, which was a key indicator for selling the US dollar a few weeks ago. The chart below depicts the symmetrical broadening wedge, with the bottom of the wedge incomplete. Rather than completing the wedge patterns, the index rose from the double bottom formations to reach the significant resistance region. The recent drop from the symmetrical wedge patterns formed an ascending broadening wedge pattern, bearish pattern with 80% probability, indicating further weakness. The US dollar index’s weakness is expected to continue, which is good news for precious metals and the Euro.
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