After having a strong performance in March, the US Dollar Index (DXY) has found itself in a steep downtrend. Further weakness is expected and thus, the majors should move higher.
Last week, the DXY was able to reach a new high for the year at 93.440. However, during the long weekend, the price started to make lower highs and lower lows. A clear downtrend has been created on the four-hour time frame and this may suggest a reversal on the higher time frames. The Dollar recently broke support at 92.500, which should pave the way for further losses.
Many majors have already started to edge higher in light of the weaker Dollar. One pair that is providing a near-perfect trade setup is EURUSD. Last week price broke out of its daily range in hopes of going lower. After a brief selloff, the price is back within the daily range. Today’s daily closure was also a hammer, which signals a potential rally back to the range high.
Tomorrow is the FOMC meeting minutes followed by Powell’s speech on Thursday. It’ll be interesting to see what Powell and the Fed see for the US economy and if they’re comfortable with the current monetary policy.
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- Read yesterday’s breakdown: Dollar Retraces and Forex Majors Rise Once Again
