Reducing USDX volatility
Christmas approach contributes to a drop in USDX trading volatility, while breaking support at 90.00 may confirm sellers’ willingness to continue to fall to 89.60 and further to 89.00. To implement this scenario, you need to get a very strong bearish fundamental factor for the USD and/or bullish for European currencies.
I would remind you that all investors are waiting for the outcome of the Brexit negotiations. Therefore, only reaching an agreement and, as a result, the UK’s exit from the EU with an agreement can trigger a sufficiently strong GBP increase to develop another wave of decline.
As can be seen in the price chart above, the quotations of this currency pair are still held in a narrow price range, indicating clear market uncertainty. The return of quotations below 1.2150, previous lows and the lower limit of the tapered channel will allow us to count on the development of a stronger wave of declines. Until then, the trend remains upwards, although the strength of buyers has decreased significantly.
Given that Europe is already resting today, trade activity may be very low with periodic moderate explosions.
All eyes are on the upcoming press conference between British Prime Minister Boris Johnson and European Commission Chief Ursula von der Leyen, which could take place as early as 11:00 Moscow time. Given the moderate strengthening of this currency pair and, as a result, its return to the maximum this year, most investors and investors are waiting for the announcement of an agreement. In this case, we’ll see the next update on the highs this year.
No contract will return a pair below 1.3400. The downside scenario takes into account the development of a strong downward trend over the medium term.
Amplitude price movement continues to decline, indicating clear market uncertainty. At the same time, the emergence of information on the final outcome of negotiations between the EU and the UK can have a strong impact on the pair. As a result, even during the European session, trade volatility can increase significantly.
Let’s say buyers’ willingness to resume growth will only be able to if quotes above 103.70/80 are set.