The Dollar Index (DXY), a key index reflecting USD strength or weakness, showed a golden cross with the 10-day and 21-day moving averages early in November. Since then, resistance has been observed at the 21-day and 10-day moving averages. Currently, it has declined to the level of the 200-day moving average. This development has essentially erased nearly half of the approximately three-month USD uptrend that started in July. The technical situation is at a crossroads, with questions about whether it will turn back towards USD strength from the midpoint or if the USD downtrend will continue into the year-end.
USD weakness has been influenced by direct factors such as market reactions to US employment statistics and consumer price index data. Additionally, the decline in the yield of the US 10-year Treasury note after reaching a high of 5% in October has also contributed to USD selling. This decline in yields may be attributed to market speculation about a halt in interest rate hikes and expectations of early interest rate cuts next year, driven by signs of a slowing US economy.
However, as indicated in the technical discussion above, the Dollar Index is at a pivotal point. It could move in either direction, and the reasons for this movement may become clearer later. It’s important to note that position adjustments are more likely as we approach year-end. This week includes the Thanksgiving holiday in the US on November 23, with shortened trading hours on November 24. Early next week, there may be a more pronounced trend of position adjustments.
In terms of currency balance, continuing to look for opportunities in AUDUSD long positions and USDJPY short positions could be a viable strategy.