Chart of the Day: Spot USD/JPY (10/08/2020) | alb.com
The Dollar Index continues to be range bound hampered by the indecision by Democrats and Republicans to arrive at an agreement over the stimulus package. President Trump issued an executive order for payment of $400 per week in unemployment benefits to be issued versus the prior $600.00 in the event some sort of resolution couldn’t be achieved. Although the amount is less than the previous allowance, it was preferable than having no arrangement in place. Also the U.S. Dollar faces increased strain and uncertainty over U.S. – China relations with the proposed ban of Chinese tech companies such as WeChat and Tik Tok on security issues as well as the U.S. – China trade deal. Not to mention the upcoming U.S. Presidential elections. Therefore, there are a number of factors weighing heavily on the U.S. Dollar and until some clarity is achieved it is expected to remain under pressure. Analyst however expect bullish sentiment above 94.50 on the Dollar Index. From a technical perspective, the inside candle that was formed in Sunday trading and price holding above the 9 daily exponential moving average, gives the expectation that price may be poised to retest the daily 50 exponential moving average around 106.57. Currently the 20 day exponential moving average is acting as dynamic resistance 106.021. There is also the close of price outside the downward sloping trendline on Friday and the next overhead trendline resistance is around 106.44. What will determine the success of this trade is strength coming into the U.S. Dollar with the Dollar Index retesting the swing high on 03/08/2020 at 93.97.
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