The Dollar Outlook Bullish With Resistance In Sight

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Market Extra

Anora Mahmudova

ICE U.S. Dollar index erases postelection gains

The dollar loses its luster.

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The bullish outlook for the U.S. dollar at the beginning of the year made sense at the time, but analysts are shifting their views after recent weakness that took the greenback to its lowest levels in six months.

Analysts at Brown Brothers Harriman, for example, said that they are most likely revising their bullish outlook for the dollar.

“Our bullish outlook for the dollar at the beginning of the year was predicated on continued economic growth, tighter monetary policy and possible fiscal measures that would accelerate growth. But due to recent softness in economic data and political turmoil in Washington we are considering scaling back the magnitude of our bullish call,” said Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman.

“We are still bullish, but perhaps not as much before,” he said.

The ICE U.S. Dollar index DXY, +0.18% a measure of the currency against a basket of six major rivals, is down 0.6% to 97.55, its lowest level since Nov. 8.

The greenback has been on a gradual downtrend since the start of the year, and sharp losses over the past two sessions culminated in erasing all of the postelection gains.

The sharpest move so far this year has been against the euro EURUSD, +0.09% , with the dollar weakening by nearly 6% year to date, while the yen USDJPY, +0.16% rallied nearly 5% against the greenback over the same period.

Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, said he was not at the point where he would revise his positive outlook.

“We would like to think that first-quarter weakness was transitory, because it’s consistent with the trend over the past several years, when the economy slows at the beginning of the year only to accelerate later,” said Esiner.

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“Our best-case scenario is for the scandals to blow over and for the [Trump] administration to have a successful foreign trip. Our worst-case scenario is for the White House scandals to implode to the extent they start hurting the real economy, either due to lower hiring or lower business investment,” Esiner said.

According to Esiner, investors had bid up the dollar after the election because traders bet that fiscal stimulus measures such as tax reform, infrastructure spending and deregulation would allow the Federal Reserve to raise interest rates faster.

Currently, Fed Funds futures are pricing in a 65% chance of a rate hike at the June 14 meeting. That probability was at nearly 90% only one week ago.

Economic data so far this year has been mixed. While employment numbers still point to a robust labor market, inflation continues to be stubbornly low.

Esiner said that continued chaos in Washington could result in a hit to consumer and business confidence that potentially slows economic growth.

“If we start noticing signs of the negative impact on the real economy we will revise our dollar outlook,” he added.

GBP/USD Daily Forecast – Sterling Breaks Upward, Trendline Resistance in Sight

GBP/USD Boosted by a Weaker Dollar

The US Dollar index (DXY) dropped to a fresh weekly low on Thursday, sending most of the major currencies a bit higher. While GBP/USD shows upward momentum, a major resistance area is within proximity.

Sterling advanced against the dollar despite a miss in UK retail sales on Thursday. The Office for National Statistics reported a decline of 0.1% in sales for October against an expected gain of 0.2%. Retail sales figures from the US will be reported later today.

The British pound is on pace to post the strongest weekly gain among the major currencies. However, GBP/USD has mostly been ranging since posting a high in late October. The pair has alternated between gains and losses for five straight weeks, presuming it holds on to the roughly three-quarters of a percent weekly gain it is currently showing.

Technical Analysis

The consolidation that took place for most of the week took the form of a bullish flag pattern. The upward break yesterday has provided a bullish signal and therefore I think the pair stands to extend higher.

However, there is some fairly important resistance in around 1.2925. A declining trendline comes into play in that area that is drawn connecting the late October high with the high printed at the start of the month.

I think it is important to recognize that the pair has broken above it’s 50 moving average on a 4-hour chart alongside the bull flag break. This is an indicator that held it lower through the early week, including the surge higher on Monday.

I suspect the indicator will offer support on dips. The main hurdle for the session ahead will be the 1.2900 level followed by the mentioned resistance area around 1.2925.

Ether Price Analysis: Bullish Outlook Continues As Resistance Levels Hold

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As Bitcoin continues its bull run, the top alts by market capitalization have also made strides of their own. Ripple shot to new all-time highs (ATHs) this week and Litecoin has now activated SegWit, a block size and scalability protocol change. Litecoin will continue to receive further protocol upgrades made possible through SegWit activation. Ethereum is due for a protocol change, Metropolis, in the form of a hard fork sometime later this year. From a user standpoint, a competitive protocol change and upgrade environment with active developers amongst the top coins ensure these technologies will continue to push the limits of finance and beyond.

Despite showing some signs of slowing last week, Ethereum continues to break hash rate ATHs, now at almost 25,000 GH/s, suggesting that miner confidence in the future of Ethereum remains strong.

GDAX continues to take the lion’s share of volume, suggesting that USD fiat on-ramping remains strong. Bitfinex also continues to sit slightly higher in price than the other exchanges due to ongoing USD deposit and withdrawal issues.

Ethereum has had two recent chart patterns that failed to complete to their respective targets, seen here on the four-hour timeframe.

There was a large bearish formation, head and shoulders, which failed to break below the 200 EMA despite having the matching volume profile. Most recently, there was a bullish continuation pattern, cup and handle, which failed to cleanly break horizontal resistance with volume. For determination of trend, the position of price relative to the 200 EMA is the gold standard. Despite two failed chart patterns, trend remains bullish while above the 200 EMA. A break of this range with volume should be the deciding factor for direction.

The daily timeframe is also showing no threat to trend with the most recent pullback due to a bearish divergence, measured from RSI, a momentum oscillator. While hindsight now, this is the type of structure — higher high in price and lower high in momentum — to identify before the price reversals occur. RSI has also reset to around 50, which usually suggests continuation of trend after correction.

On the 30-minute timeframe, there is an active bullish reversal chart pattern known as the Adam and Eve double bottom. The Adam, a steep V, and Eve, a gentle U, is a very common fractal pattern when solid support has formed. The measured move for resolution is the distance from horizontal resistance to the bottom of support, projected upward, which yields a target of

This horizontal resistance is also a key zone that broke upward previously after a triangle consolidation.

The competitive development milieu for the top cryptocurrencies is important to ensuring a healthy user experience.

Hash rate suggests continued miner belief in the strong future of Ethereum.

Although range-bound after two large but failed chart patterns, trend remains bullish.

A low-timeframe double bottom pattern suggests support has formed and price will shortly return to the top of the range.

Trading and investing in digital assets is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTCMedia related sites do not necessarily reflect the opinion of BTCMedia and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

Josh Olszewicz is a self-taught trader who began his bitcoin journey in late 2020. After being exposed to and learning as many technical indicators as possible, he became an expert on the Ichimoku cloud.

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