Trade idea on the Dollar Index (DXY) from November 2, 2022
Investors are not in a hurry to form new positions, preferring to wait for the outcome of the FOMC meeting, which will be announced at 19:00 GMT.
Yesterday a slight support to the dollar was provided by the ISM manufacturing activity index, which fell to 50.2 p., but still was better than the forecasted 50.0 p. Before that the manufacturing activity index was lower, but still was above the key level of 50.0.
According to the Labor Department, the number of job openings rose from 10.28 million to 10.71 million in September, an increase of nearly 500,000. The United States labor market remains strong, giving the Fed no reason to pause in tightening monetary policy.
According to CME Fed WatchTool analysis, the probability of a 75 basis point rate hike on Tuesday rose from 86% to 88%.
In other words, the Fed has no reason to reduce the speed of monetary tightening. The regulator will continue to fight rising inflation, which means the dollar index will resume its upward movement.
Also, the demand for the dollar as a defensive asset is growing amid worsening relations between the US and the PRC due to different positions on Taiwan.
We propose that the DXY will rise above 113.00 and suggest that a forex order be included in the trading plan
Buy-limit 110.90 take-profit 113.00 stop-loss 110.20
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