US Dollar Maintains Uptrend as Gold, Oil Price Volatility Surges: What's Next?
In the lead-up to last week, the US Dollar Index experienced some weakening as the Federal Reserve adopted a more dovish stance. This trend coincided with escalating geopolitical risks in the Middle East, which were expected to intensify over the weekend.
However, the US dollar has since undergone a corrective phase, retreating to 105.5 after reaching new yearly highs in early October.
As we kick off the new week, the dollar is trading around the 106.4 mark, demonstrating a somewhat bearish horizontal trend. This shift comes as the anticipated ground operation in the Middle East failed to materialize over the weekend, and diplomatic efforts took center stage.
While the postponement of the operation was attributed to weather conditions, ongoing concerns about the region persist.
It's worth noting that the Middle East issue may not be fully reflected in the broader market, and any expansion of conflicts to new regions could potentially trigger negative trends on a global scale.
This is further underscored by substantial increases in oil and gold prices observed on the last business day of the previous week, which may serve as an early warning of such developments.
The index, which attempted to sag from the lower band of the rising channel last week, found support again at the average 21-day EMA. This average value had also worked as dynamic support in the previous short correction in August.
Currently, 106.35 (8-EMA) is the closest support point for the DXY. Just below it, the 106 level appears as a more critical support to prevent the decline from expanding. In a possible correction, the 104 level (89-EMA) may come up as the main support.
However, while last week's jump indicates that there will be an increase in dollar
Read more on investing.com
