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U.S. Dollar: Expect A Further Decline

Feb. 01, 2019 12:54 PM ETUDN, USDU, UUP


  • The reopening of the government shall cause the U.S. dollar to have a further fall.
  • The Federal Reserve just provided the bears with some much-needed support.
  • I am leaning towards the U.S. dollar bears being in the driver's seat.

In my last article on 23rd January, I had highlighted that the U.S. dollar (UUP) is at a crossroad where the probability of the currency having a downward move is rather high. Moreover, I had also highlighted that if the U.S. dollar were to break below the 50% Fibonacci support level, then this would result in the currency having a swift fall until the 100% Fibonacci support level. This belief of mine proved to be true as the currency broke below the 50% Fibonacci support level on 25th January, after which it managed to fall until the 100% Fibonacci support level within three trading sessions. However, I believe the downward move shall now continue as I expect the currency to fall to the range between 127.2% and 161.8% Fibonacci support levels. Hence, to establish the likelihood of this occurring, I shall look at the fundamental news affecting the currency, whilst also analyzing the chart using technical analysis tools.

Fundamental News:

The government shutdown:

In my last article, I had highlighted that the U.S. government shutdown was positive for the U.S. dollar bulls in the short run. The shutdown delayed several economic reports from being released which would have otherwise had some sort of an impact on the Greenback. This assumption of mine proved to be true. I say that because President Trump's announcement that the government will be reopening temporarily may have caused the bears to once again get a grip on the currency. Moreover, I expect the bearish stranglehold to remain as the extent of damage done to the U.S. economy will be exposed gradually. This, in turn, shall ensure that the U.S. dollar gets a constant dose of bearish pressure in the days to come.

Foreign positions:

In my last article, I had highlighted that the unwinding of

This article was written by

I am a finance and investment professional whose prime focus is on the British, Indian and American financial markets. I specialise in technical analysis with my key area being Candlestick pattern analysis and Fibonacci analysis.  Academically, I posses two masters degrees one is a Masters of Science in Finance degree from the University of Portsmouth, United Kingdom and the other is a Masters of Commerce degree specialising in Accounting. My Bachelors degree is in Economics, Finance and Banking from the University of Portsmouth, United Kingdom.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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