Breaking News
Get 40% Off 0
🔎 See NVDA's full ProTips for an instant risks or rewards Claim 40% OFF

US Dollar Sinks in November: Can Greenback Find Support Before 2023 Ends?

By Investing.com (Günay Caymaz)CurrenciesDec 04, 2023 05:29AM ET
www.investing.com/analysis/us-dollar-sinks-in-november-can-greenback-find-support-before-2023-ends-200644096
US Dollar Sinks in November: Can Greenback Find Support Before 2023 Ends?
By Investing.com (Günay Caymaz)   |  Dec 04, 2023 05:29AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
EUR/USD
+0.10%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
-0.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
-0.07%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • November brought a correction to the Dollar Index, and eventually, it found stability around the 103 level.
  • EUR/USD on the other hand is awaiting signals from Lagarde's speech to determine next direction.
  • Meanwhile, gold has retreated slightly after a bull run toward all-time highs.
  • Missed out on Black Friday? Secure your up to 60% discount on InvestingPro subscriptions with our extended Cyber Monday sale.

In November, the dollar index experienced a correction as bullish momentum waned. The greenback eventually breached the range between 105 and 107 that had persisted throughout October.

Finding a balance around the 103 levels, the DXY rebounded marginally from a crucial support zone, recuperating from a nearly 4% dip in the previous month.

Analyzing the daily chart, the DXY experienced a descent below its pivotal support at an average of 105.3.

The downward trajectory extended to the Fibonacci 0.618 level relative to the recent uptrend, witnessing a substantial rebound at this juncture, which aligns with an average of 102.5.

While acknowledging reactions at other Fibonacci retracement levels corresponding to 104.2 and 103.4 during the November downturn, the most decisive response emerged at the Fib 0.618 level.

Despite this, the overall trend appears to maintain a bearish stance. The Dollar Index, recovering from 102.5, is currently encountering resistance at 103.4, coupled with its 8-day EMA value, shaping this level as a dynamic barrier.

DXY Daily Chart
DXY Daily Chart

For a recovery in the dollar, the 103 region needs to be decisively crossed this week. Although a rebound at this point has the potential to carry the dollar index up to the 104.5 region, the index may encounter stiffer resistance at the 104.5 level and turn its direction down again.

On the other hand, the current trend remains valid that the weakening of the dollar may continue. This means that it will be difficult to break through the 103 band, while the DXY is more likely to test the 102.5 support once again. A possible breakout will accelerate the downtrend and we can see that the dollar may continue to weaken towards the 101 region.

On the last working day of last week, Powell's statements were interpreted as cautious. While Powell acknowledged that the policy has slowed down the economy, he said that interest rates have reached the restrictive zone. Despite reiterating the possibility of a hike if necessary, the market is firmly convinced that the interest rate hike cycle is over.

Economic data to be released this week will provide important signals about the US economy. The ADP Nonfarm Payrolls data on Wednesday will be closely monitored as a leading indicator before the Nonfarm Employment data to be released on Friday. In addition, PMI and initial jobless claims data to be announced throughout the week may be decisive on the course of the dollar index.

The employment report to be released on Friday will be closely monitored as it will be key for the Fed's interest rate decision to be announced on December 13.

EUR/USD: Lagarde's Message Key for Next Direction

In its recovery trend against the dollar, the EUR/USD fell to the 1.085 band when it faced a sharp reaction at the 1.1 dollar level last week.

EUR/USD Price Chart
EUR/USD Price Chart

The reason for this decline can be attributed to the 2.4% decline in November inflation last week and the ECB's interest rates rhetoric that the ECB may cut its interest rates faster than expected. Therefore, ECB President Lagarde's 's speech today has become more important for the course of the Euro. Lagarde's signals on the interest rate situation before the data coming from the Eurozone this week can be priced on the Euro side.

When we look at the EUR/USD chart, it is seen that the pair finds support at the level of 1.085 in the short term, while decisive messages from the ECB may cause the Euro to continue to increase in value against the dollar. Technically, the average value of 1.096 stands out as the first resistance point. Above this price, we can see that the trend may settle in the range of 1.10 - 1.12 before the new year. In the lower zone, below 1.085, the 1.076 level may appear as a more solid support for the moment.

Gold Retreats: Support at $2070 Needs to Hold to Target $2200

Last week, investors in search of yield turned to gold as geopolitical risks rose again with the end of the ceasefire and weakening demand for the dollar.

Gold Price Chart
Gold Price Chart

With the increasing expectation that the interest rate cut could be made earlier, investors in search of alternative yields wanted to take a quick position before the new year, while demand for gold began to increase.

Gold, which turned its direction upwards in October with the start of the clashes between Israel and Hamas, saw a partial correction in the first half of November with some decrease in geopolitical risk and broke a new record by rising to $ 2,150 before Asian trading hours today with support from the $ 1,930 band. The yellow metal quickly retreated from its peak level as the new week began, showing volatility at the beginning of the week, falling as low as $ 2,060.

From a broader perspective, gold seems to have returned to its last peak in May. Accordingly, if the support of $ 2,070 is maintained, we can see that the gap up to $ 2,150 can be filled during the week. If the weekly close comes above $ 2,150, we can see that gold can move towards the $ 2,180 and then $ 2,200 band until the end of the year.

If the support of $ 2,070 cannot be maintained after the rapid retreat, this time ounce of gold may be likely to see a correction towards the $ 2,010 band during the week. For the gold market, the geopolitical situation and economic data from the US that may affect the interest rate outlook will be closely monitored throughout the week.

***

You can easily determine whether a company is suitable for your risk profile by conducting a detailed fundamental analysis on InvestingPro according to your own criteria. This way, you will get highly professional help in shaping your portfolio.

In addition, you can sign up for InvestingPro, one of the most comprehensive platforms in the market for portfolio management and fundamental analysis, much cheaper with the biggest discount of the year (up to 60%), by taking advantage of our extended Cyber Monday deal.

Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor

US Dollar Sinks in November: Can Greenback Find Support Before 2023 Ends?
 

Related Articles

Scott Barkley
USD/JPY: A-B-C Sets up the Next Move By Scott Barkley - Feb 21, 2024 1

Note: FOMC minutes todayBearish: We are currently @ 149.99 in a range. We have an a-b-c pullback and id we can break support here, we are looking to continue to the ATR target @...

US Dollar Sinks in November: Can Greenback Find Support Before 2023 Ends?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Edmond Marimo
Edmond Marimo Dec 07, 2023 3:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Spot on!
Parisa Active
Parisa Active Dec 04, 2023 7:31AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
9780.85
Edy Moy
Edy Moy Dec 04, 2023 7:31AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is money transfer to my account POSB savings account
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email