Another 48h - Money Seems To Be Flowing Into The Rising DXY

2024/11/12
Another 48h - Money Seems To Be Flowing Into The Rising DXY
“in addition to usd strength, an eur weakness appears to be added!
is this justified from an eurozone economic policy perspective?”



104.951 points : 2024/11/09 - last price action
104.426 points : 2024/08/02 - W Trend Reversal High
102.160 points : 2024/08/05 - W Trend Reversal Low
This price action is important, at least in my opinion, because share prices had already fallen on this Friday, after the publication of the monthly US labor market figures. And the sell-off accelerated on the following Monday, both in the DXY and/or on Wall Street, in the US stock markets DJIA & SP500 & IXIC incl. NDX . The Japanese stock market NI225 suffered its worst point loss ever on Monday - and the largest percentage decline since 1987. And fell as much as -12% on Monday, August 5, 2024, before recovering most of the losses on Tuesday. US indices also fell more than average on Monday, with the SP500 and IXIC closing around 3% lower. The British UKX and the European leading index SXXP each fell by 2%. And volatility indicators like the VIX were, at the time, at levels last seen during the pandemic sell-off in 2020. For better or worse, traders and/or investors were forced to close their derivative positions due to the US labor market data, as the USDJPY exchange rate pair continued to accelerate its downward trend from more than 160 USDJPY, which had started since July 2024. And in retrospect, this above-average fast and low price action in the USDJPY was more or less the main reason for these distortions - because the price action, as we now experience every day, is usually not that big. On the contrary - that's why I chose the DXY as a learning index, if you will.

“I start with the assumption that the market is always wrong and that there is a divergence between the way people look at a situation and what the situation is.”
George Soros

Today, our German DAX falls below the 19,000 point mark - at the same time as the EURUSD slides below the 1.06 mark. Oh man, how I love these ambivalent interactive connections when it comes to the foreign exchange market. It is how George Soros, my great philosophical and psychological role model, tried to describe it with his reflection theory in terms of understanding price action. Economics, politics, price action - everything plays a role to a greater or lesser extent, sooner or less. One requires the other! Or was it the other way around? I don't know! But what I do know is that the US economy currently seems to be growing out of US stagflation, while here in Germany, my country of birth and homeland, the political lights are threatening to go out. Our social democratic liberal green federal government has resigned - and we will soon have new elections here in Germany. After Trump's election victory, the capital is fleeing Europe! So with Trump, are the USA facing glory days because capital is being withdrawn from Europe? It looks like this - who will replace the USA as a liquid port? Our Eurozone? In which the largest economic area, even our german economic, is facing new political elections? And while France. the 2nd biggest eurozone economy, is led, shall we say managed, by a minority government? I don't think so - at least not 2025! That's why today's price action could make sense; if traders and/or investors are positioning theirself, for 2025? But I am not so sure! However, today currently only the DXY is rising - in addition to the US growth scenario just formulated, in addition to the continued long-term "carry trade" possibility in the USDJPY . And there is now also a fundamentally weaker EURUSD in terms of economic policy, which our European common currency could send again below 1.00 EURUSD in the coming year 2025. The stock markets, both in the USA and in Europe, are lagging behind somewhat. The stock market's big opponent, the bond market, seems to be setting the tone at the moment. And that with a higher yield curve US10Y probably because many traders and/or investors in the bond market are assuming a future scenario with higher us tariffs and corresponding us inflation? I can't explain the price action any other way at the moment.

*Will The Price Action Remain Above 104.447 Points?
*Will The Bulls Conquer 105 And More This Week?
*Will The Bulls Conquer Even 106 This Week?
These are the 3 questions we should get answered this week - in order to learn something. What should we learn? With a price action above 104.447 points we would have a confirmed breakout from the w trend reversal formation! At least for a week. And with a price action of over 105 points, and/or even over 106 points, we would have even reached the second downward trend (over 105 points) and/or even the first downward trend (over 106 points) since this year's annual high in 2024, from April 2024. But don't expect that - this week. If we are more or less back to 106.517 points by the end of 2024, then it would still be a good bullish uptrend in the DXY .

106.517 : 2024/04/16 - Annual High 2024
106.490 : 2024/05/01 - 1st Failed New Annual High 2024
106.130 : 2024/06/26 - 2nd Failed New Annual High 2024
106.023 : 2024/11/12 - last price action
104.799 : 2024/07/30 - Last High Before W Trend Reversal Formation
104.447 : 2024/08/01 - High Of W Trend Reversal Formation
We are currently not even 0.500 points below the new annual highs for 2024. And that after we had a new annual low of 100.157 points on September 27, 2024. I would like to refresh your memory again! "Remember how bearish the bias in the media were? Me too!" And everyone assumed that Trump - me too - would never come back to the Office in 2025. Yes, at the time I was hoping for a new short USDJPY 4XSetUp - and now (almost) everything is different. Capital seems to be unable to wait for 2025 to begin - Trump 2025 back in office. And in addition to the DXY , the US yield curve in particular also seems to be positioning itself accordingly, which makes it more difficult for the stock markets to rise. Nevertheless, the price action in the DXY moved to 106.178 points today. Which meant an increase of just over +0.5%. after we started this week just as bullish yesterday. So don't lose your nerve if the price action moves backwards down to 105 points again. Because with a price action above 104.447 points, the current scenario for the DXY is fundamentally bullish. Even if there should be another red bearish price action for a few days, even a week.


With best wishes
and with good intentions!
Aaron



Another 48h - DXY ... is pure information material.
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