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FxWirePro Call Review: Dollar index likely to rise another 1-1.5 percent before selloff resumes

The dollar index has reached all our short side targets. Here is a recap,

In April 2017, in an article named, “FxWirePro: Dollar likely to decline by more than 5 percent” available at http://www.econotimes.com/FxWirePro-Dollar-likely-to-decline-by-more-than-5-percent-630175  , we forecasted that the dollar index, which is the value of the dollar against a basket of six currencies would decline more than 5 percent from the then current level of 100.5 to reach 95 area.

We cited two major reasons behind the forecast,

  • “The dollar faced siege from two fronts; one being the uncertainties surrounding US policies which include not only the uncertainties with regard to policies under the new administration but also the ability of the new administration to pass its agendas successfully through the House of Representatives and the Senate.”
  • “The second one is more global in nature and we at FxWirePro have been discussing this over the past year or so. While the US Federal Reserve has turned out to be quite hawkish in 2017, it is well behind the curve when compared to its 2014 forecast that triggered the impressive 2014 summer dollar rally. Despite falling behind Fed’s own forecast, the dollar could find support from the dovish actions of other central banks namely the European Central Bank (ECB) and the bank of Japan (BoJ). Now, those central banks are considering a reversal in their monetary policies, which is not likely to bear well for the dollar.”

Since then, these two above fundamentals which are working against the dollar have not abated but intensified. Washington is suffering an internal battle as people working within the administration but against president Trump and the media continue to undermine the current administration with damaging leaks. The central banks have also intensified their hawkish rhetoric.

In a subsequent article published in late May, named, “FxWirePro Call Review: Dollar index target extended from 95 to 93”, available at http://www.econotimes.com/FxWirePro-Call-Review-Dollar-index-target-extended-from-95-to-93-723907 , we recommended,

“Since our article in April, the dollar index has slid further and we expect the trend to continue even if it finds support around 95 area. We now expect the dollar index to slide by another 4 percent (approx.) from the current level of 96.9 to 93 area.”

In our next article in this call, named, “FxWirePro Call Review: Dollar index reaches target at 95; next target extended from 93 to 91.5”, available at http://www.econotimes.com/FxWirePro-Call-Review-Dollar-index-reaches-target-at-95-next-target-extended-from-93-to-915-814928  we further extended our final target from 93 to 91.5

And in a separate article in September, we further extend our final target from 91.5 to 90.3 as the index reached as low as 91.6 that week. We also recommended partial profit booking in the tune of 45-55 percent of the open positions.

The index didn’t reach the extended target in that run, While we didn’t scrap our extended target, we warned our readers in an article named, “FxWirePro: Dollar index likely to test sellers around 95 area”, available at https://www.econotimes.com/FxWirePro-Dollar-index-likely-to-test-sellers-around-95-area-942062 that the dollar might retrace to 95 area.

The index reached just above 95 before sellers emerged and in the current run, it has reached our target of 90.3, as well as another extended target at 89.7 area and beyond.

After reaching the level, the dollar is bouncing back and our calculations suggest that index, which is currently trading at 90.22 is likely to correct at least 1-1.5 percent before selloffs resume again.

 

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February 16 15:30 UTC Released

USECRI Weekly Annualized

Actual

8.5 %

Forecast

Previous

8.8 %

February 16 15:30 UTC Released

USECRI Weekly Index

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149.8 %

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152.2 %

January 31 00:00 UTC 2600426004m

ARAnnual Primary Balance*

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2016 bln ARS

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January 31 00:00 UTC 2600426004m

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2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 3782437824m

ARTrade Balance

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-1541 %

January 31 00:00 UTC 2600426004m

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2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 3782437824m

ARTrade Balance

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-1541 %

January 31 00:00 UTC 2600426004m

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 2600426004m

ARAnnual Primary Balance*

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 2600426004m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

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Bln AR bln ARS

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