Sunday, June 4, 2023

Is U.S. Dollar About To Rally Off Support And Drive Down Commodities?


Combined U.S. Dollar And Euro Monthly Charts.

Combined U.S. Dollar And Euro Monthly Charts.

Inflation pressures are increasing as the economy tries to digest a prolonged period of higher commodity prices.

While select commodities have pulled back (and this has investors hopeful that inflation moderates), the broader commodities arena remains elevated.

So what’s next? That may depend on one major influence — the U.S. dollar.

The  has been weak over the past year and that has been a tailwind for commodity prices. But the U.S. dollar is currently testing an important technical support level marked by its rising up-trend channel and horizontal support (2009/10 highs and recent lows). Commodity bulls hope the U.S. dollar breaks down and continues lower.

For reference, the chart above also shows the euro. A stronger also is good for commodities. The euro is currently testing major resistance, and commodity bulls would love a breakout here.

If the U.S. dollar breaks down below trend support and the euro breaks out, commodity prices could surge once more. If not, they may come back to earth. This is a big trend test. Stay tuned

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link


Please enter your comment!
Please enter your name here



Related Stories