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USDX: Surged After New Year, Will USD Reverse the Trend at the Beginning of New Year?

Forex Market
Summary:

The market remains highly uncertain in 2023, but the probability of a unilateral decline in the USDX is low currently.

Buy USDX
End Time
CLOSED

103.800

ENTRY PRICE

108.000

TGT PRICE

100.800

SL PRICE

101.828 -0.060 -0.05%

1475

Points

Loss

100.800

SL PRICE

102.325

CLOSING

103.800

ENTRY PRICE

108.000

TGT PRICE

Fundamentals

The USD has continued to fall for 2 months since last October, mainly due to a series of factors such as the Fed slowing down the pace of rate hikes, the ECB continuing to stay hawkish, the Japanese Ministry of Finance intervening in the currency market and the central bank raising 10-year bond yields. From the current point of view, 2023 is still full of high uncertainty, while the rate of decline in inflation, recession, the Fed's terminal interest rate level, and the Bank of Japan's possible exit from the negative interest rate policy will result in dramatic volatility in financial markets.
In general, the probability of a unilateral decline in the USDX is low now. The U.S. Markit final manufacturing value for December recorded 46.2, a new low since May 2020, showing weak manufacturing performance. In the high-interest rate environment, the gloomy economic outlook has led to lower manufacturing output, and this depressed scenario may continue in 2023. As for the labor market, November data illustrated that wage growth remained strong and the unemployment rate stayed low at 3.7%. This week's Nonfarm Payrolls data exhibited that the market expected the unemployment rate to stay at 3.7% in December, job growth slowed to 200,000, and wage growth slowed down YoY and MoM. Moreover, a strong job market may set inflation entrenched, leading the Fed to stay hawkish at this stage. 

Technical Analysis

Regarding the daily chart, USDX has been consolidating above 103 since December. From this point of view, it is the consolidation support area of June 2022. Therefore, if the price fails to drop below 103, USDX could rebound to some degree, with the first rebounding target at 108.  USDX: Surged After New Year, Will USD Reverse the Trend at the Beginning of New Year?_1

Trading Recommendations

Trading direction: Long
Entry price: 103.800
Target price: 108.000
Stop loss: 100.800
Support: 103.000/100.000
Resistance: 105.800/108.300
Risk Warnings and Investment Disclaimers
You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or signal, or any other product is suitable for you based on your investment objectives and financial situation.

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Focus on macroeconomic analysis with extra attention to the geopolitical impact on financial markets.

Rank

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Articles

218

Win Rate

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P/L Ratio

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COPPER, WTI, XAUUSD

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