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USDX: USD Is Under Multiple Pressures 

Summary:

Two labor market-related data may boost the market's expectations of slowing down interest rate hikes. Thus, the market could first take advantage of these two data to "enjoy" a bit in anticipation of Powell's hawkish speech. The USD may first fall and then rise under Powell's speech. As for the rise, it depends on the degree of Powell's hawkishness. If it is less hawkish than the market expectations, the USD may even decline.

Sell USDX
EXP
EXPIRED

107.291

ENTRY PRICE

106.034

TGT PRICE

108.000

SL PRICE

101.838 -0.050 -0.04%

--

Point

EXPIRED

106.034

TGT PRICE

106.321

CLOSING

107.291

ENTRY PRICE

108.000

SL PRICE

Fundamentals

The USD continued its oscillation on Tuesday, closing slightly up 0.16%. On the eve of Powell's speech, the market was in a cautious wait-and-see attitude. Although the recent market has gradually digested the Fed's monetary policy tightening path, Powell's speech at this time must be meaningful considering that this is the last speech of the Fed officials before the start of the blackout period, coupled with the current market trading bias that the Fed is nearing the end of the tightening cycle. 
Fortunately, the Fed's No. 2 and No. 3 officials have already delivered their speeches and exposed some clues. First, Brainard. There are many people who interpret her words as dovish, which is obviously a misjudgment because the whole speech was a warning that monetary policy may be tighter than before the pandemic, not looser. Also, even when talking about the change of "supply chain pressure relief", she was emphasizing that "although there is a relief, the pressure is still greater than before the pandemic". It is too hard to interpret any dovish meaning. 
Secondly, Williams' outlook on the economy is more pessimistic than the Fed's previous forecast. At the same time, he also clearly expressed the impossibility to reach the 2% inflation target next year, and inflation is expected to be higher than 3% instead. Moreover, it will take longer to suppress potential inflation, implying that it is hopeless to cut interest rates next year. This is clearly at odds with current market expectations. 
The speech of these two persons may lay the foundation for Powell's hawkish stand. 
In addition, ADP data will be released during the day. The market is currently eager to see further evidence of a slowdown in the U.S. labor market. As the "lead" data of Nonfarm Payrolls, ADP undoubtedly has the "ability" to mobilize market expectations. Generally, the market expects that this ADP will be smaller than the previous value, and the market may interpret it as a slowdown in the labor market. 
Furthermore, the job vacancy data matters as well, which is also expected by the market to be less than the previous value. If this data and ADP data are in line with market expectations, the expectation of a slowdown in interest rate hikes will heat up. Besides. Since these two data are released before Powell's speech, the market may 'enjoy' them. The USD may first fall and then rise under Powell's speech. As for the rise, it depends on the degree of Powell's hawkishness. If it is less than the market expectations, the USD may even decline.  

Technical Analysis

Regarding the 4H chart, USD is running in the oscillation range between 107.291 and 106.0344 and is also in a descending channel. It is blocked by 108.824. There is strong and massive resistance in the range of 107.29-107.35, in which there is the top of oscillation and the 100-day moving average as well as the descending trendline and the top of descending channel. The key resistance is 108.453, and the USD will only stop dropping after it breaks below this resistance. Besides, the lower strong support is 105.465, which is close to the new low of 3 months and the bottom of descending channel. Furthermore, the key support is 104.651, which is the 61.8% Fibonacci retracement. If the USD breaks below this line, it could reach 103.1, which is the starting point for the gains since June. Referring to indicators, Stoch and DMI allude to a short-term plunge in the USD.  
USDX: USD Is Under Multiple Pressures _1

Trading Recommendations

Trading direction: Short
Entry price: 107.291
Target price: 106.034
Stop loss: 108.00
Support: 106.034/105.465/104.651
Resistance: 106.824/107.291/107.735
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I have an in-depth study of fundamentals, especiaslly for the US dollar market. I'm good at short and medium term trading by virtue of my profound financial theoretical knowledge and extensive practical experience.

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