Browsing: US Dollar Forecast

USD/MXN has finally managed to develop a new leg higher. The DXY’s aggressive rally helped the USD to take full control and to dominate the currency market. The pair has found temporary resistance, but it could resume its growth anytime soon.

The FOMC meeting boosted the DXY, so the greenback has rallied since yesterday night. USD/MXN has slipped lower in the last hours also because the US Unemployment Claims increased unexpectedly in the previous week.

No taper tantrums after Fed policy shift hints

The surprise shift in the stance of the the US Federal Reserve  on both interest rates timing and inflation is boosting the dollar. The Fed has brought forward by a year – to 2023 – the first rate increase. Also, Fed chairman Jay Powell hinted strongly that there was a chance that the inflation spike may not be transitory after all.

On previous occasions when the Fed has suggested a more hawkish monetary policy, it has led to market gyrations in the so called ‘taper tantrums’ of the past, when there were hints that the central bank might trim or stop its asset purchasing programme.

The indicator has reported 412K jobs versus 360K expected and compared to 375K in the previous reporting period. Actually, a temporary decline was somehow expected after the most recent rally.

usd/mxn price chart 17 june 2021

USD/MXN has moved down within a down channel after breaking above the downtrend line. The aggressive upside breakout from this pattern and making new highs confirmed a potential strong growth. 

It has found resistance above the 50% retracement level and now is traded lower at 20.4568. It could retest the 38.2% retracement level before resuming its growth. Consolidating above the 38.2% (20.3734) could bring us a new long opportunity and could validate a new bullish momentum.

Also, a new higher high, jumping and closing above 20.6214 could activate more gains towards the 61.8% (20.8550) retracement level. The outlook is bullish, so the current drop could help us to catch a new upwards movement.  

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US dollar forecast: Preview for the main foreign exchange events that will rock currencies ► focusing on major events and especially on publications in the USA, moving the US dollar (greenback). Here are some general data. Scroll down for the latest US dollar outlook

USD and forex general characteristics

The United States Dollar is the reserve currency of the world, partly due to its use in settling oil prices and other commodities. Foreign exchange pairs are divided into majors, minors, and crosses. Both majors and minors include the USD.

US economic indicators and political developments influence currencies more than anywhere else in the world. The decisions and statements by Federal Reserve officials make the biggest waves. The US economy is by far the largest in the world. US politics and policy also have an outsized impact on currencies.

The outlook consists of mostly US economic events but also key market-moving figures from other major economies. The euro-zone, the UK, and Japan stand out.

Recent USD Moves

The greenback suffered a bad start to the year: poor growth and scandals hurt the US dollar. Hopes for fiscal stimulus faded with the repeated failures to repeal Obamacare. Despite two rate hikes in the first half, the dollar struggled. Other economies outperformed America.

The second half already looks a lot different: economic growth reached 3% annualized and the Fed seems to stick to its plan to hike rates three times. In addition, Trump’s tax plan inspires markets, despite hurdles to pass it before Christmas.

Headwinds come from the political scandals. Low inflation also weighs on the dollar. If the “mystery” persists and wages do not accelerate, Janet Yellen and co. could refrain from further tightening. The new Fed Chair Jerome Powell will take office in February 2018, and he may not stick to the current plan of raising rates three times.

Latest weekly US Dollar forecast

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