Another 48h - DXY At 2024 High Today After Rate Cut Yesterday

2024/12/19
Another 48h - DXY At 2024 High Today After Rate Cut Yesterday
“fed has decided, powell has spoken - and price action reacted!
are fed`s expectations now hawkish? back to higher for longer?”



The US Federal Reserve's projections on interest rates, and/or above all Jerome Powell's statements - no, rather the reaction of the market, i.e. the buying/selling behavior of traders and investors (also like you and me) - ensured a bloodbath on Wall Street yesterday with a market capitalization loss of $1.8 trillion. If you will, the conflict of interest has opened up between WallStreet, especially the bullish tech traders and/or investors, because WallStreet wants to see lower interest rates - while the US Yield Curve has not become significantly cheaper since the interest rate cuts began. A cfd online broker analyst and/or meanwhile something like a business friend of mine told me today: "The Fed is already aligning its monetary policy with something that isn't the case yet: Trump's tariffs." I wouldn't go that far! No - I fear that the FED will cut interest rates too early, while inflation is not yet significantly below GDP growth, because it doesn't want to accept that WallStreet will fall by more than -20% because the US Yield Curve remains and is an attractive fixed-interest alternative. That's why in the summer of this year 2024 I formulated all of our 4XSetUps the way I formulated them - and for a few days now I've been really afraid, i mean really really if you know what i mean, that our accumulated booking profits will disappear, and in most cases we'll even be stopped out. Because the US stock markets are oversold in the historical context (oversold in the short term, of course) - the big decline tomorrow will now be important, because the big fishes, dealers, brokers, and/or hedge funds, are now likely to sell their long hedges and could this create further long-term selling pressure despite yesterday's brief oversoldness. Me too? Us too? with our 4XSetUps? I don't know! Apparently WallStreet, the traders and/or investors, did not expect this "hawkish" cut in this wording - as I feared in yesterday's post before the interest rate decision. “This reminds me a lot of December 2018!” my friend, a CFD online broker analyst, added today. Yes man!

• Will the bulls recapture the terrain above 106.517 points again?
  
• Will the bears recapture the terrain under 104.447 points again?

That's what we wanted to learn last week, based on the price action in DXY . And we saw that the DXY actually closed at 106.945 points last Friday, December 13th, 2024 - even above the price action of 106.517 points. The price action is therefore again above the 1st annual year high, from 2024/04/16, at even 106.517 points. However, it is still below the terrain of the annual high of 2023, with 107.348 points, from 2023/10/03 and/or also the annual high of 2024, with 108.071 points, from 2024/11/22. Which is fundamentally bullish - as long as the price action can be defended by the US bulls above 106.517 points.

“Perhaps you were too idealistic. I admit it. But I don't believe I overestimate the importance of ideals. Only when people believe in something can they move the world. The trouble is that people simply don't believe in open society as a goal worth fighting for.”
George Soros

• Will the bulls defend the terrain above 106.517 points this week?
  
• Or will the price action fall back to the Dec`24 low at 105.420 points?

The low is crucial because it is more or less also the intraday high from November 6th, 2024 at 105.441 points when Trump was re-elected. So, in the case of higher price action, we can de facto argue that the DXY has been rising since Trump's re-election. And we will find out this week, if the bulls defend the recaptured price action of 106.517 points from last week, i.e. the 1st Annual Year High 2024, from 2024/04/16, whether the bullish trend in the DXY will continue? Which is what I tend to assume, even if the price action stays above 106.517 points!


The last price action of the DXY is today
on Thursday, the 19th December 2024 at 108.367 points.
This calendar week, everything was in the shadow of the Fed's interest rate cut yesterday, which was expected by most. If the Fed doesn't lower its interest rates by -0.25%, would that be a big surprise on the financial market, which could trigger an earthquake? But the FED delivered and the DXY also reacted accordingly - the price action is currently more or less the annual high for 2024!

108.367 : 2024/12/18 - last price action
108.071 : 2024/11/22 - Last Annual Of This Year 2024
107.821 : 2024/12/19 - Today's Intraday Low
106.806 : 2024/12/11 - Wednesday High Last Week
106.731 : 2024/12/02 - Monday High (1st Dec`24 Week)
106.720 : 2024/12/04 - Wednesday High (1st Dec`24 Week)
106.637 : 2024/12/10 - Tuesday High Last Week
106.602 : 2024/12/03 - Tuesday High (1st Dec`24 Week)
After breaking out of our small, fine uptrend channel, the price action in the DXY is currently a sure-fire success - regardless of the political standstill that is threatening in the USA. Because US President-elect Trump is accepting a standstill in government business by demanding that his party. Tech billionaire Musk also got involved. Trump called on all members of his Republican party not to agree to a legal text that had already been negotiated with the Democrats. “Republicans must become SMART and STRONG,” the Trump team said in a statement. We therefore hold US President Joe Biden's party responsible if a so-called shutdown occurs. In order to prevent government business from coming to a standstill on Saturday night (local time), Biden must sign the legal text by Friday at the latest. If this does not happen, some state institutions will have to stop working and many state employees will remain unpaid. The White House, however, reminded that agreements between the parties must also be adhered to. “A deal is a deal,” said Biden spokeswoman Karine Jean-Pierre. "Republicans should keep their word." Anyone who questions the agreement that was painstakingly reached across party lines would harm "hard-working Americans" and the stability of the country. And Elon Musk, now a close confidant of Trump, tweeted yesterday on the private platform he bought: "Any member of the House or Senate who votes for this outrageous spending bill deserves to be voted out in 2 years!" Therefore, it remains exciting when it comes to price action in the DXY . Because the problems here in our Eurozone are at least as big, if not bigger - compared to the USA. Not only because we have two self-confident, patriotic great nations like France and/or Germany, but on the one hand there is also a fiscal policy problem in France and in my home country Germany there are even new elections in February 2025. “Political stock exchanges have short legs!” is what we say colloquially here in Germany. That's true - but every single man and/or woman with short leg is therefore usually quick. As we have recently experienced regularly in the case of volatile price action in the DXY and or also EURUSD . Above all in the us bonds US10Y as well as french FR10Y and/or german DE10Y .


With best wishes
and with good intentions!
Aaron



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